The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

17 February 2013

Targeting small and medium sizes enterprises for R&D Tax support

Joint media release with
Greg Combet AM MP
Minister for Climate Change and Energy Efficiency
Minister for Industry and Innovation

Small to Medium Enterprises (SMEs) will be the biggest beneficiaries from changes to tax incentives for research and development (R&D) to make more money available to support new areas of innovation in Australia.

Deputy Prime Minister and Treasurer Wayne Swan and Minister for Industry and Innovation Greg Combet today announced changes that will better target the incentive to ensure businesses most in need of support can grow and prosper.

Under the changes, very large businesses with annual Australian turnovers of $20 billion or more will no longer be eligible for the R&D Tax Incentive but will be eligible to claim their R&D expenditure under general tax law provisions, for example, as deductions at the corporate tax rate for business expenditure.

The change will add a third tier to the eligibility requirements for the program and targets the program to SMEs.  It will apply to income years starting on or after 1 July 2013.

"The R&D Tax Incentive is one of the most important elements of the Government's support for our innovation system. It will continue to provide generous, easy-to-access support for around 10,000 companies each year who are undertaking eligible R&D," Mr Swan said.

"The change will affect less than 20 corporate groups and will ensure this support is better targeted at small to medium businesses."

Companies with a turnover of less than $20 million doing eligible R&D can receive an uncapped fully refundable offset if they are in tax loss and, from 2014, eligible companies will be able to receive refunds as quarterly credits - improving cash flow and helping them conduct more R&D.

Savings from the reforms - estimated at over $1 billion from 2014 to 2017 - will fund Government priorities including measures announced in the Government's Industry and Innovation Policy Statement, A Plan for Australian Jobs.

The Government has been clear that because of continuing write-downs that have seen $160 billion wiped from revenues since the start of the global financial crisis, it would need to make structural savings to make room for key new priorities and maintain the sustainability of the Budget. 

"The Government's Plan for Australian Jobs will improve opportunities for Australia's small to medium sized businesses to innovate, grow, export and create new jobs so we continue to build a diverse and flexible economy," Mr Combet said.

"Companies that innovate are more productive, more profitable and more likely to create new jobs.

"International experience also shows that small companies are more responsive to R&D tax incentives - that is why our rates of assistance for these companies are amongst the most generous in the world."