Patent & Trade Mark

Proposed cuts to R&D tax Incentive Bill has lapsed.

Date: 20 April 2016
Author: Kate Mahady

The proposed 1.5% cut to the R&D tax incentive will not go ahead as the Bill before the Senate has lapsed, and will not proceed.

The cuts, aimed at reducing the rate of the Incentive from:

  • 45% to 43.5% for companies with a turnover of $2-$20M, and
  • 40% to 38.5% for larger companies of $20 million or greater,

were originally introduced to coincide with the then proposed reduction of company tax rate of the 1.5%.

With this implementation for company tax rate reduction being withdrawn some time ago, the threat to reduce the rate of the R&D tax incentive by 1.5% points remained until this week.

This is especially good news for small innovative companies with a turnover of less than $2 million who, by order of their tax rate reducing from 30% to 28.5% introduced in last year’s budget, see a benefit of the R&D tax offset at an effective 46.5%.

This is good news for Australian companies undertaking R&D and provides more certainty in R&D planning.

The current review of the R&D tax incentive by a Government taskforce in relation to the effectiveness and integrity of the programme, is ongoing and we expect the report to be issued shortly.

 For further details, please email Kate on

Tags:  Kate Mahady, R&D Tax, R&D Tax incentive

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