Retreat & Destroy: what R&D reforms are doing to start-ups

For a government that is threatening to wipe out a significant number of tech start-ups with its proposed changes to the research and development tax incentive, it shouldn’t come as a surprise the Morrison government appears to have failed to do any research into the potential impact.

After all, if the government had conducted its own study it would know that R&D tax incentives are the unsung hero of the start-up world, and reducing accessibility could be the death knell for innovation in Australia.

But this is the same government that is without a minister focused only on innovation and one that has reduced spending on science, research and innovation by a colossal $1.1 billion in real terms over its five years in power – a cut of 10 per cent.

It also transpires that the government’s key advisory group for R&D tax incentives hasn’t met since March 2017, despite changes being rolled out.

The proposed changes were disastrous enough without the latest news that many tech firms will be forced to repay millions in R&D incentives after the Australian Tax Office followed through on its February 2017 announcement that it would audit software businesses.

These businesses were awarded R&D tax incentives after receiving costly advice from top-tier advisory firms, encouraging them to apply.

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