Cash flow. Cash flow, cash flow, cash flow. Two little words that can either make or break a business. Start-ups and SMEs will know that cash flow is the elixir of life, which is why the Labor government was applauded in 2011 when it announced its intention to pay entitlements to companies eligible to claim the R&D Tax Incentive cash rebate in quarterly installments. Our clients told us first hand that they viewed this act as progressive – a policy that seemed to show an understanding that cash flow and innovation are inextricably linked – and we wholeheartedly agreed.
Unfortunately, in December 2013 the new Coalition government announced that it would not be proceeding with the program of quarterly credits. Intensive planning and consultation with industry groups and huge support from all parties affected meant that the move came as a complete surprise. In fact, it was shown by a leading body in the biotech industry that the timing of the incentive payments was a significant factor in the value of the Incentive in encouraging additional R&D activities.
As a result, it comes as little surprise that the announcement by the Greens last week that it will ‘move amendments in the Senate to…put in place quarterly payments’ has been received with rapturous applause. The same amendment sees the Greens also aim to block the government’s plan to exclude companies with revenue over $20billion from claiming the Incentive.
With the aim of the Incentive to increase Australian levels of innovation and presence on the global stage, we were left scratching our heads as to why some of those companies at the forefront of innovative developments in this country would be denied such benefits.
Hopefully, we will see a positive result in the near future, with the government recognising the immense benefit quarterly payments can deliver in helping shape an economy of innovation.