Mid-size businesses stand to lose Research and Development (R&D) incentives and miss out on promised company tax rate reduction as a new bill was introduced to Parliament today.
Deep in the Federal Budget papers was a note that the level of the tax offset support was to be dropped by 1.5% to 43.5% for the refundable tax offset and 38.5% for the non-refundable.
This bill has now been introduced into the House of Representatives and is on its way to the Senate. Further it is going to apply for the years of income starting after 1 July 2014.
“The reduction in the rate was to go hand in hand with the reduction in income tax rate. The reduction is therefore proceeding but the reduction in income tax rates is not, except for small business with a turnover of less than $2 million, Sukvinder Heyer, National Leader R&D Tax, Grant Thornton Australia.
The Treasurer noted in his budget speech the need for companies to innovate. This Bill makes it difficult to incentivise businesses to do so.
“Innovation does not happen in isolation. It requires companies small, medium and large to be playing their part. Stable support is needed at all levels. Continued changing of the rules leads to uncertainty – the antithesis for encouraging investment.
“Mid-size businesses need a stable environment to invest in innovation and the chipping away at the main mechanism for supporting innovation, without public consultation, is disappointing, said Ms Heyer.
Helina Lilley, National Public Relations Manager, T +61 2 8297 2421, M +61 437 725 520, E helina.lilley@au.gt.com
