SMALL and medium -size businesses will get access to $1.4 billion for research and development under changes to the tax system, but companies will need to wait another year to make use of the new arrangement.
From 2010-11, companies with an annual turnover of less than $20 million will be able to claim a 45 per cent refundable tax credit.
The credit is available to Australian firms in the form of a tax loss, giving benefit to high-tech start-up companies in areas such as biotechnology and information and communications technology, the Government says. Foreign-owned companies will be able to claim a 40 per cent tax credit.
The scheme replaces the existing tax concession scheme for research and development. As a transitional measure before the introduction of the scheme, the research and development tax offset expenditure threshold in the existing program will increase from $1 million to $2 million for the year.
The current tax concession is accessed by about 7000 companies of various sizes across several sectors. The Government claims 5500 small businesses will be able to benefit from the new 45 per cent credit. All up, the new arrangement will cost $1.4 billion more than the current tax concession scheme over the forward estimates period: $125 million in the first year, rising to $426 million a year by 2012-13.
The Government will also put $196 million over four years towards establishing a Commonwealth Commercialisation Institute to support universities and publicly funded organisations to commercialise research.
The institute, described by the Government as a "radical new approach to commercialising research", will also support private companies with potential for rapid growth by offering business mentors and expert advisory services and facilitating capital investment.
The programs come as part of $8.58 billion in science and innovation funding in this year's budget, a figure the Government says is up 25 per cent on a year earlier. The spending follows an announcement in last year's budget that the Commercial Ready grants scheme would be cut at a saving of $700 million over four years.
