Dulux, other large manufacturers would lose out under R&D intensity threshold

Proposed changes to R&D tax incentives, requiring a certain “intensity threshold” to be met by companies, would damage Australian manufacturers, Dulux Group has said.

The Australian Financial Review reports on a presentation by Dulux Group at the Science Meets Business conference, during which the company said a proposed threshold of 1 – 2 per cent of business expenses would see Dulux receive no tax offset.

A recent review of the R&D tax incentive found the concession scheme was open to rorting, though was worth maintaining. The intensity threshold proposed – aimed at promoting “additionality” in R&D efforts – would see Dulux and other larger manufacturers miss out on a tax credit.

A spokeswoman for the company told The AFR it was “not well thought out and will damage local manufacturers such as Dulux Group who are strong R&D performers competing against global competitors”.

The company employs 137 research scientists, though misses the threshold due to its size, meaning it did not reach the minimum 1 per cent level of expense.

Dulux was championed by industry Greg Hunt early in his time in the portfolio. He cited them as an example that innovation was not limited to start-ups, and visited their Melbourne site as his first trip as minister.

Other large manufacturers have warned against changes to the R&D tax regime. Cochlear chair Rick Holliday-Smith said this month that efforts to reclaim lost tax revenue through changes came at a time that other countries were doing more to encourage R&D.

“Over time we may see the loss of an increasing amount of research investments to overseas jurisdictions,” he told the company’s annual general meeting.


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