ROME: In announcing distinguished academic and entrepreneur Dr Alan Finkel as Australia’s next Chief Scientist, Prime Minister Malcolm Turnbull has sent a crucial message about the future of our nation’s economy and its link to innovation.
This appointment is a great signal to anyone thinking of investing in clever new commercial ideas and activities.
Among all of the government measures developed to support and help stimulate Australian innovation so far, none is as important as the set of incentives provided through the nation’s tax system to offset the cost of research and development (R&D) activity.
The existence of these incentives through the R&D Tax Incentive program has proved one of the enduring success stories of federal government policy. Thousands of companies benefit from this program which allows them to stay in Australia and innovate, helping to build our economic productivity.
A great feature of this program is its ability to allow innovation to be fostered in all sectors of the economy. The government is not predicting the areas of the economy that can benefit because it’s a self-assessment regime.
This means innovative companies that meet threshold tests can access it when they are developing something new and different, and need it most.
It is this type of innovation that will keep Australia in the game. Yet, over recent years, these incentives have consistently been targeted for cuts by both sides of politics.
Labor kick-started this trend by seeking to disqualify larger companies from accessing the program. The Coalition has followed suit by limiting eligibility based on the level of businesses’ annual R&D spending and also proposing reductions to the rates of the tax offsets available to the companies that still qualify.
