Fintechs embrace $2bn R&D spend
The fintech sector has largely welcomed the government’s pivot away from its previous proposed cuts to the R&D tax incentive, but some have warned the budget still has some shortfalls.
The federal budget has outlined a $2 billion commitment from the government towards its research and development (R&D) tax incentive, aiming to help businesses manage the economic impacts of COVID-19. The refinement adds to $1.5 billion that is being used to promote manufacturing in Australia.
The research and development changes include a reversal out of saving the government $1.8 billion under its current R&D tax incentive bill before the Senate and the scrapping of a $4 million refund cap for companies with an annual turnover of less than $20 million.
For companies with an annual turnover of less than $20 million, the refundable R&D tax offset is being set at 18.5 percentage points above the claimaint’s company’s tax rate, up from 13.5 per cent on the current bill.
Other companies with a larger turnover will still face the current tiered intensity approach, but will now see two tiers instead of three.
The marginal R&D premium will be 8.5 percentage points above the claimant’s company tax rate for R&D expenditure between 0 per cent and 2 per cent R&D intensity, while R&D expenditure above 2 per cent R&D intensity for larger companies will see the premium rise to 16.5 percentage points.
The government has also deferred the start date of the changes to 1 July 2021.
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