Money
Issue No. 8 - December/ 2002/january
Taxing Times
Cut compliance burdens to boost R&D expenditure
by John Rawson
Australia should extend its raft of tax concessions and minimise compliance burdens in a bid to stimulate the nation’s level of research and development activity.
That’s the thrust of a submission by Deloitte Touche Tohmatsu to a major Federal parliamentary inquiry on business commitment to research and development.
In its submission, Deloitte says the present base rate of 125 percent for research and development tax concession does not adequately provide the support and incentive to Australian companies to undertake domestic R&D activity, and lags behind the support offered by many of Australia’s trading partners.
Furthermore, the reduction in Australia’s corporate tax rate from 36 percent to 30 percent has in effect eroded the after-tax benefits of the R&D tax concession and reduced the effective cost to revenue.
With the corporate tax rate at 30 percent in 2001-2, the 125 per cent R&D tax concession provides a benefit of 7.5 cents for every $1 of eligible R&D expenditure. This is lower than the A9.9 cents benefit in China, A12.5 cents in the UK and A35 cents in Singapore.
There is a clear link between technological progress driven by increased R&D activity and economic growth, both for individual firms and for the economy.
Business has identified a number of key impediments to private sector research and development in Australia, including a lack of access to appropriate funding and resources, regulatory compliance and the absence of a stable innovation policy platform.
The Deloitte submission was presented to the House of Representatives Standing Committee of Science and Innovation’s Inquiry into business commitment to research and development in Australia.
While Australia continues to lag behind international competitors in its level of expenditure on private sector R&D, the present tax concession and offset schemes could be further enhanced to boost the level of expenditure by pri...
