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AiGroup still skeptical of new R&D Tax Credit

30-08-2011
by 
in 

The Australian Industry Group remains unconvinced of the effectiveness of the new R&D Tax Credit Bill.

"Our consistent input to the Government has been that there are substantial risks inherent in the new arrangements, said AiGroup Chief Executive, Heather Ridout.

"We remain unconvinced that the R&D Tax Credit Bill will be effective in supporting research and development in large swathes of the manufacturing sector, Ms Ridout said.

"We will be closely monitoring the take-up and effectiveness of the scheme and would urge the government to be open to future amendments.

"There is a lot of change in the scheme and how it is administered.  It will be important for the government to make a substantial effort to build understanding in industry of these changes."

Ms Ridout said the AiGroup supports the areas of improvement including the increase in the effective rate of the tax incentive for small and medium businesses and the quarterly payment of the refundable tax offset for companies in a tax loss position. 

“We also welcome the Government’s belated decision to remove the retrospective impact from its proposal, which we would have regarded as extremely retrograde,” Ms Ridout said.

“However, overall, Ai Group is disappointed that the Government is proceeding with changes to the R&D tax incentive which we believe risk undermining the general effectiveness of the scheme. 

“In particular there are serious questions that the remodelled tax incentive will fail to stimulate experimental development which is the bread and butter of business R&D.”  

Ms Ridout said the “shortcomings” in the new approach pose threats to businesses conducting R&D and to the broader national R&D effort.

“The tightening of eligibility comes at a time when manufacturing generally is finding it hard to attract investment, let alone for research and development, and when Australia’s productivity performance has collapsed, Ms Ridout said. “R & D has a key role in lifting this performance.

"The Government has indicated that it will be monitoring the operation of the new arrangement closely, as will Ai Group."

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