Ten years later, are tax incentives for research working?
The incentive scheme has taken a big step backwards since a preapproval process was introduced. Government is also reviewing its ‘world-first’ criterion for software developments
Companies’ take-up of tax incentives for research and development is on the decline — and the introduction of a cumbersome preapproval process is being blamed. The Department of Science and Technology has received only 92 applications for its research and development incentive in the year to September. That is a significant drop from 311 in 2013. To put these numbers into international perspective, in a country like Norway, 6,000 applications for a similar tax incentive are being processed in a couple of weeks. The Australian government received about 17,000 applications for its incentive in 2014. The incentive has been in place for a decade, but the policy change in 2012 introduced means companies have to obtain approval for their research and development before they can claim the deductions on project-related expenses. This change has led to huge backlogs as companies wait more than three years for approval. Dov Paluch, director of global innovation incentives at Catalyst Solution...
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