Publication date: 29 May 98 |
Source: THE TAX INSTITUTE
Constant changes to the R&D tax concessions have created an uncertainty about the
environment in which to undertake R&D in Australia, according to a survey released today
by the Victorian R&D Discussion Group (VRDG) of the Taxation Institute of Australia.
According to David Gelb, Chairman of the R&D Discussion Group, many respondents said
they had considered taking their R&D operations offshore to escape the increasingly
unsupportive and uncertain Australian environment.
"Companies are nervous about the current R&D environment in Australia. Without some
stability and direction from the Government, there is little incentive for many companies to
invest in R&D projects," Mr Gelb said.
The survey results also showed a clear link between levels of industrial R&D and the
competitiveness of Australian industry and thus Australia's overall economic strength.
"The link between continuing economic strength and investment in R&D is clear. If Australia
doesn't have strong commitment to R&D expenditure, our competitiveness will suffer and, in the
long term, so will our economy," Mr Gelb said.
The survey of large, medium and small sized companies representing all major industry groups
was designed to determine the effectiveness of the current regime of government policy and
assistance in encouraging and supporting industrial R&D.
The key survey outcomes were:
overwhelming support for the R&D tax concession to be increased to 150%;
little support for the R&D START system of grants for R&D;
a clear preference for the R&D tax concession over R&D START grants.
"The survey results clearly reflect the significant decline in companies registering for the
R&D tax concession. Figures for 1996/97 currently show that 2,917 companies have applied
for registration, whereas the figure for 1995/96 was 3,666," Mr Gelb said.
"Companies want the Government to provide broadly-based and accessible support for
industrial R&D, which is precisely what the R&D tax concession was intended to do."
"Constant changes, particularly the reduction to 125 per cent, are likely to reduce the
incentive for Australian companies to invest in further R&D," he said.
Mr Gelb added that the survey showed that respondents consider the R&D START program
to be largely inaccessible, as funding is limited and discretionary. This is compounded by the
time and cost involved in submitting grant applications.
The results of the survey are presented in 'Industry Research and Development: Industry