R&D TAX BACKWARDS

Written on the 18 March 2010

A BRISBANE tax specialist has slammed the Federal Government’s proposed R&D tax incentive legislation, saying it will stifle corporate innovation and limit business claims.

BDO Kendalls research and development partner Tracey Murray, says businesses that take on risky R&D practices and produce successful results will be precluded from R&D applications under the draft legislation.

“But a company that conducts R&D activities that are either technically or commercially unsuccessful will be eligible to make an R&D claim,” says Murray.

“Instead of dealing with specific issues that needed to be freshened up as part of the R&D program, Treasury has adopted a sledgehammer approach to the draft legislation, resulting in the majority of current R&D claimants being ineligible to claim under the new proposed program.

“Not even the cost of the labour required to develop the R&D will be claimable, as the current legislation stands.

The new program does however support abject failure, where the R&D activities have produced nothing of value.”

Murray says the speed at which the draft legislation came out after the consultative process indicates that either it was already drafted and the government provided the 'illusion’ of consultation, or the Treasury ignored the collective wisdom of the business community.


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