But the centerpiece of the Government’s “Innovation Agenda for the 21st Century” – a $1.4 billion R&D tax credit scheme that will double the level of assistance available under the current R&D tax concession scheme – will not be available until 2010-11.
The Government came under heavy fire from business groups last year after killing the highly successful Commercial Ready scheme, which provided $700 million of assistance to early-stage technology companies each year.
While this budget does not include a direct replacement for Commercial Ready, the enlargement of the R&D tax incentives will be welcomed – although the fact the new incentives do not kick in for more than 12 months will not.
The new tax credit provides a 45% refundable credit for firms with an annual turnover of less than $20 million, which the Government says is equivalent to a tax concession of 150%. This means that firms will receive a tax refund of 45% of their R&D spending when they file their tax return.
“Importantly, the refundable credit will be available to small companies in tax loss, with no limit on the level of R&D expenditure they undertake. This will provide a real boost to start-up companies in areas such as biotechnology and ICT,” Innovation Minister Kim Carr said in a statement.
The Government says around 5500 small firms stand to benefit under the new arrangements.
As an interim measure before the tax credit scheme comes in, the Government will lift the R&D expenditure cap for the existing R&D tax offset from $1 million to $2 million in 2009-10.
The Government will also pump $3.5 billion into a new Clean Energy Initiative, on top of $1 billion of funding previously announced. Over $2 billion will be spent on so-called clean coal technology, $1.6 billion will be spent on solar technologies and $465 million will go towards the establishment of the body Renewables Australia, which will support research into renewable technology.
Other measures in the budget for innovation include:
- $196 million to establish a Commonwealth Commercialisation Institute.
- $512 million to help indirect university research costs.
- $1.1 billion for science programs to support research in space and astronomy, marine and climate and future industries.
- $802 million for new funding for universities and research organisations
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