Submission in Response to the Business Tax Working Group Discussion Paper, 13 August 2012

This brief submission to the Business Tax Working Group responds to its discussion paper of 13 August 2012, which asked whether revenue forgone through business tax concessions would be better directed at lowering the corporate tax rate. Research Australia addresses only the Research and Development (R&D) Tax Incentive, which had been in place since 1 July 2011. It agrees with the Working Group that base broadening should be approached cautiously and notes that small and medium-sized enterprises (SMEs) in health and medical research welcomed the incentive as a way to attract risk capital. Citing the objectives set out in the second reading speech for the Tax Laws Amendment (Research and Development) Bill 2010, it maintains that it is too early to assess whether the incentive has met those objectives or drawn additional risk capital to SMEs. Research Australia opposes any change to the incentive without evidence of its net effect and recommends that any assessment be deferred for at least two years so that the cost to revenue and the impact on R&D activity and the economy can become evident.