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Achieving innovation and global competitiveness through research and development tax incentives: Lessons for Australia from the UK


The legislative framework under which Australia’s new ‘R&D Tax Incentive’ (R&DTI) is to be administered received Royal Assent on 8 September 2011. The underlying policy objective of the R&DTI is to make Australian companies more innovative and globally competitive. One key feature of the R&DTI is the adoption of a tax credit system for research and development (R&D) expenditure, similar to that already in operation in the UK.

This article identifies lessons for Australia (principally for policymakers, but also for practitioners and tax administrators) based on the UK experience of R&D tax credits. Findings are informed by in-depth interviews conducted with UK-based R&D tax advisors as to their evaluation of the strengths and weaknesses of the UK system in terms of its design, implementation and outcomes. The lessons include the need for policymakers to remain focused on the objectives of the R&DTI and how best to achieve these. This requires careful consideration of the level of incentives provided and the recipients. Simplicity should be a key objective. Tax administrators have an important role to play in promoting the scheme, and in particular, by engaging practitioners.

Author profiles

Ann is an Associate Professor at Bournemouth University.
Current at 1 February 2012
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Prof Margaret McKerchar
Margaret is a Professor Australian School of Business, School of Taxation and Business Law, The University of New South Wales. - Current at 01 May 2014
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