The federal government’s attempt to remove R&D tax concessions for companies with over $20 billion annual revenues has been criticised as a disincentive to innovation.
The threshold for companies who want to claim R&D tax concessions, identical to that put forward by the former government in its Plan For Australian Jobs policy, will provide a small saving “at the price of longer-term growth in the future” according to accounting firm KPMG.
“To the best of our knowledge, Australia will be the first country in the world to exclude such a specific and targeted subset of large companies from claiming an R&D tax incentive,” KPMG partner David Gelb said, according to the Australian Financial Review.
The Coalition was critical of Labor’s plan to limit the size of companies who could claim the concession.
"If we are going to be smart, if we are going to be innovative, we can't keep chopping and changing and reducing access to the R&D incentives," said former industry spokeswoman Sophie Mirabella last February.
The Coalition’s bill imposes the same limit on the size of companies – which will apply to roughly 15 firms doing business in Australia – as Labor’s did. The bill passed the House of Representatives in December, and the government has justified it in terms of the budget deficit.
“The message being sent to big business is that Australia cannot be relied upon to support R&D and that it should invest elsewhere,” KPMG said in its submission to a Senate economics committee.