The Australian Industry Group expressed disappointment with new changes to the R&D tax incentive that “undermine the general effectiveness of the scheme.”
While the AiGroup supported some aspects of the new legislation, its chief executive Heather Ridout said the industry body still had major concerns.
"Our consistent input to the Government has been that there are substantial risks inherent in the new arrangements, Ms Ridout said.
"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.
"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 says R&D plays a key role in lifting this performance.
"As we have done from the start, Ai Group supports the areas of improvement in the R&D Tax Credit Bill,” Ms Ridout said.
“Ai Group has supported 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.
"The Government has indicated that it will be monitoring the operation of the new arrangement closely, as will Ai Group," Ms Ridout said.