The Australian Government formed a Business Tax Working Group (BTWG) in 2012 to investigate the options for reducing the corporate tax rate in a revenue neutral way by offsetting the cut in the rate with the removal of existing business tax concessions. In response to the Working Group’s discussion paper, Research Australia made a submission focused on the potential abolition of the Research & Development Tax Incentive. The submission opposed any change on the basis that the R&D Tax Incentive had not yet been in place long enough in its latest form for an evaluation to be made of its effectiveness or the impact of its removal.
On 24 October 2012, the BTWG released the draft of its final report. It did not recommend changes to the R&D Tax Incentive or to other business concessions such as the depreciation allowance. While the BTWG was in favour of a further cut in the corporate tax rate when economic circumstances permit, ‘a cut in the company tax rate funded from within the business tax system should not be pursued at this time’. Research Australia continues to monitor the final report and the Government’s response.