Home topics finance tax Small Business Tax Small Business R&D Tax Review report recommends capping refund available to start-ups at $2 millon James Harkness September 30, 2016 The Federal Government has encouraged businesses to submit feedback on findings from Research and development (R&D) Tax Incentive Review report, released this week Undertaken by Chair of Innovation Australia Bill Ferris, Australia’s Chief Scientist Alan Finkel and Secretary to the Treasury John Fraser, the review had the purpose of identifying opportunities to “improve the effectiveness and integrity of the R&D Tax Incentive, including by sharpening its focus on encouraging additional R&D spending.” The R&D Tax Incentive programme was introduced on 1 July 2011 to boost the quality and quantity of R&D undertaken by industry to drive productivity and growth. The report makes six recommendations, including: “a cap in the order of $2 million on the annual cash refund payable under the R&D Tax Incentive, with remaining offsets to be treated as a non-refundable tax offset carried forward for use against future taxable income”. The review panel provided the following rationale for the cap: “…the programme incorporates effective additional support for SMEs and start-ups, since its refundable component is available at a premium rate to companies with turnover less than $20 million. This provides important cash-flow assistance to SMEs and increases the potential for additional investment in R&D. “The considerable growth in the cost of the refundable component is, however, impacting the programme’s long-term sustainability. Refundability is likely to provide fewer tangible benefits for