Encouraging business innovation
R&D tax credit
Aspiring Researchers Pty Ltd has an annual turnover of $10 million but is in a tax loss situation.
The company spends $1 million on eligible research and development (R&D) in 2010‑11.
Previously, Aspiring Researchers Pty Ltd would only have been able to claim the 125 per cent R&D Tax Concession on its expenditure, allowing it to add $375,000 to its tax loss.
Under the new R&D Tax Credit, Aspiring Researchers Pty Ltd will be able to receive a refund of $450,000 immediately.
The net tax benefit to the company under the R&D Tax Credit is $150,000 — twice the $75,000 benefit under the current concession.
Competition
The primary role of Government in fostering business innovation is through policies that encourage competition. The Government is continually improving the effectiveness of market regulations and is lowering barriers to overseas goods and services, including through planned phased tariff reductions.
Supporting business innovation
By 2020, the Government aspires to a 25 per cent increase in the proportion of businesses engaging in innovation. To achieve this, the Government will provide $196.1 million to establish a Commonwealth Commercialisation Institute which will bring together research, business and finance in the Australian economy.
The Government will also replace the current research and development (R&D) tax concessions with an expanded R&D tax credit that improves support for smaller firms in tax loss; establish an Innovation Investment Follow‑on Fund to support start‑up companies in the wake of the global financial crisis; and provide additional funding to the textiles, clothing and footwear and automotive industries to ensure future sustainability.
Increasing funding across the business innovation chain
