The latest recommendations from a select committee on fintech and regtech could see R&D Tax Incentive (RDTI) payments dished out on a quarterly basis.
The Senate Select Committee on Financial Technology and Regulatory Technology, chaired by Senator Andrew Bragg, tabled its second interim report last week, making two recommendations relating to the contentious RDTI scheme.
First, it suggested that different assessment methodologies should be used for the scheme.
The report did not go into detail as to what alternative methodologies would entail, but referred to submissions that suggested the current means of assessment is not compatible with software engineering, and alternative methods could allow for more flexibility and adaptability.
“Consideration” should also be given to a separate, standalone RDTI scheme for software startups, it said.
Second, the committee advised that payments for successful applicants should be made on a quarterly basis, to help businesses with cashflow without increasing the overall cost of the scheme.
“This is a sensible measure that would provide important support to new startups,” the report said.
The recommendations come just over a week before the federal budget 2021, which could see the government taking on advice from the industry that has been submitted to the committee.
The RDTI scheme has been under scrutiny for years, with a suite of controversial proposed changes to the scheme rolled back in last year’s federal budget.
While a $4 million cap on refunds and a three-tiered system were scrapped, confusion remains over the eligibility of software-focused startups to secure refunds under the scheme.
Both former small business and family enterprise ombudsman Kate Carnell and StartupAus chief executive Alex McCauley have called for a new, completely separate software-specific RDTI scheme.
“The interpretation of what constitutes R&D in the act has started to narrow with the expansion of the cost of the scheme and the increase in the number of software claims,” McCauley said last month, speaking at a public hearing of the select committee.
That’s made it harder for software companies to claim the incentive, he added, suggesting that of all software claims that were audited, about half were rejected.
Many business owners “now feel that this backbone support policy … is slipping away from them”, he said.