Treasurer Scott Morrison handed down his second Federal budget last night. While there is significant discussion around infrastructure spending and changes to welfare payments, the impact on business grants and R&D Tax Incentive has been minimal, and that’s good news. For full details of grant changes, please read our detailed summary. Or, for a simple one page list of new and extended grant programs read our short summary. What hasn’t changed Many of the key government grants and programs for business have remained untouched. The R&D Tax Incentive has been the subject of continued speculation, but in last night’s budget, there were no changes announced. The government is still to respond to the recommendations from the recent review of the R&D Tax Incentive, however, from a budget perspective, no news is good news. 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. In the main, the $40.9B of Federal Grants (as a share of the $49.1B of total business grants and assistance) has had minimal changes. Manufacturing support gets a bump The government announced last week the budget measure to establish the Advanced Manufacturing Fund. This $101.5M program has several components, most notably the $47.5M Advanced Manufacturing Growth Fund which seeks to fund up to a third of capital upgrades that drive innovation and advanced manufacturing. This applies mainly to Victoria and South Australia, however, manufacturers in other states may benefit from [...]
The Government has proposed a reduction in the R&D Tax Incentive program by 1.5%. And if this sounds familiar, yes, it is a new attempt to achieve the rate cut that was attempted numerous times throughout the last three years. As of 16 September 2016, the Bill has passed both Houses and the change will impact both the refundable and non-refundable rates of the R&D Tax Incentive with a reduction of 1.5% effective from 1 July 2016. This means that: - Refundable tax offset (equivalent to a 150% deduction) for eligible entities with an aggregated turnover of less than $20 million per annum, provided they are not controlled by income tax exempt entities, will be reduced from 45% to 43.5%. - Non-refundable tax offset (equivalent to 133% deduction) for all other eligible entities will be reduced from 40% to 38.5%. This will affect all R&D claims for the 2016-17 financial year (specifically, R&D expenditure incurred from 1 July this year) but not the claims currently being processed for 2015-16 financial year. Please feel free to call us on 03 9853 9853 to discuss this if you have any further questions about your R&D Tax Incentive claim.