R&D Tax update

By Jesse Williamson

No major changes were proposed to the R&D tax incentive in the 2022 Federal Budget, which is both encouraging and relieving.

After nearly a decade of uncertainty around the program, it appears that the importance of innovation and R&D is now being recognised at a federal level.

The raft of changes proposed in the 2021 budget will now come into effect for FY22 R&D claims – more detail on this below.

Patent Box Scheme

The ‘Patent Box’ scheme announced in last year’s Budget includes a concessional tax rate of 17 per cent (rather than the normal 25 per cent or 30 per cent tax rate).

The legislation is currently before Parliament, and it has now been extended to patents linked to agriculture and low emissions technology from 1 July 2023.

This is on top of the medical and biotech patents, granted after 11 May 2021.

Export Market Development Grant (EMDG)

Austrade’s EMDG program is designed to support export-ready Australian businesses as they establish themselves in international markets.

In this year’s Federal Budget, an additional $100 million in funding has been proposed to expand the program to provide financial support to existing regional and rural small to medium-sized exporters affected negatively by significant global impacts.

This adds to the $80 million for EMDG announced in December 2021 and it will go a long way to supporting the increased popularity of the program in recent years. 1

Investment in collaboration and innovation in the university research sector

To bring universities and industry together, a $2.2 billion University Research Action Plan was announced in February.

This initiative is to improve the development of the next generation of Australian companies and products. The Plan includes:

$1.6 billion to kickstart Australia’s Economic Accelerator, a competitive funding program to support research projects with high commercial opportunities.

$150 million to expand CSIRO’s Main Sequence Ventures which will make venture capital investments in companies linked to Australian research and development.

$243 million to support select universities to boost priority research and development.

Digital Games Tax Offset

As part of Australia’s ‘digital economy’ strategy, announced in last year’s Budget, a new digital games tax offset was announced.

The digital games tax incentive will provide a 30 per cent refundable tax offset, to support video game development in Australia.

The offset will start from 1 July 2022 and there will be a minimum spend threshold of $500,000.