The Australian Government’s proposed R&D Tax Credit is rated the world’s best system for providing incentives to foster R&D activity, according to a report from KPMG.
The Competitive Alternatives 2010 Special Report: Focus on Tax states: “the most dramatic change is for Australia, moving up from fifth place in 2008, to first in 2010. This change is a result of Australia adopting a new R&D tax credit system as of July 1st, 2010”.
According to Innovation Minister, Senator Kim Carr, an unsolicited endorsement by an international firm of KPMG’s breadth and depth of experience is one of the strongest possible vindications of the Australian Government’s new R&D support measures.
“This places our new R&D Tax Credit ahead of other tax credits offered in Canada, United States, France, Italy, Japan and Mexico. It also ranks higher than the R&D assistance provided in the Netherlands and the United Kingdom,” he said.
Among major cities, the KPMG report ranks Melbourne and Sydney first and third in the world respectively for international R&D tax competitiveness, placing them ahead of London and New York.
The new R&D Tax Credit is designed to double the rate of government support for R&D conducted by firms turning over less than $20 million from 7.5 cents in the dollar under the existing Tax Concession to 15 cents, Senator Car claims.
Smaller firms can reportedly take this benefit in cash if they end the year in tax loss. This is said to allow more small innovative firms to get an immediate contribution towards their R&D, even if they are not yet turning a profit.
Larger businesses will also receive more assistance than under the present program, says Senator Carr. They will be eligible for a 40 per cent non-refundable tax credit, which raises government assistance from 7.5 cents to 10 cents in the dollar.
“The new R&D Tax Credit is more generous for all eligible businesses, better targeted at R&D deserving of public support, and boosts support for small and medium enterprises,” Senator Carr said.
“This report emphatically underscores the value of our overhaul of R&D support.”
The Government expects the new R&D Tax Credit to start from 1 July 2010.