Treasurer Scott Morrison handed down his third Federal budget last night. Tax measures featured heavily in the budget with taxpayers receiving windfalls in the form of tax rate cuts. Protecting the integrity of the tax system was also heavily featured, and included several changes to the R&D Tax Incentive scheme.
Consistent with recent budgets, there were a number of measures around infrastructure spending and stimulating innovation and job growth, however this hasn’t translated into business grants and assistance.
What hasn’t changed
Programs such as the Entrepreneurs Program, including Accelerating Commercialisation, and Export Market Development Grant have had no changes. No other key grants have been abolished or cut either.
R&D Tax Incentive
In response to the findings of the 2016 review of the R&D Tax Incentive (R&DTI), the Government will reform the program, sharpening its focus on additional eligible business R&D while ensuring its ongoing fiscal affordability. Forecast changes to the R&D Tax Incentive in last night’s budget will see a small change with some SME’s and Startups benefit to drop from 43.5% to 41%, while large business benefits will potentially reduce significantly based on how much R&D expenditure they have. We discuss the changes in detail here.
What’s in it for Small Business?
There are no new grant and assistance programs announced for small business in this year’s budget. The government will continue to provide support through the $20,000 Asset Write Off and tax cuts for businesses under $50M turnover.
Are Startups affected?
Much of the concern around startups has been focussed on the proposed changes to the R&D Tax Incentive. Whilst the budget introduces a number of changes, we expect the impact on Startups to be minimal. There have been no changes to other relevant programs such as the Entrepreneurs Program or Landing Pads.
Infrastructure, Regional Development and Cities
Regional Australia will benefit from key infrastructure programs, such as:
• $206.5M for round 3 of the Building Better Regions Fund (BBRF) to support construction of community infrastructure.
• $2.3M for the Regional Jobs and Investment Package for Regional Tasmania to support projects that diversify the regional economy, stimulate economic growth and deliver sustainable employment in the region.
The Government will also provide $25.9M for the Stronger Communities programme which provides funding of between $2,500 and $20,000 for small capital projects that deliver social benefits for local communities.
What about support for training and skills development?
Mature age workers are the big winners here; the Government will provide $189.7 million over five years to support mature age Australians to adapt to the transitioning economy and develop the skills needed to remain in work.
And good news for women, the Government will provide $4.5 million over four years from 2018-19 to encourage more women into science, technology, engineering and mathematics (STEM) education and careers.
This budget, by many accounts, has been quite restrained. The focus has been primarily about the income tax cuts and the overhaul of the personal taxation system. While there have been some changes to the R&D Tax Incentive, and extension of many infrastructure grants, there are no notable changes to business grants.