R&D Tax Concession - Impact on the Firm

The R&D Tax Concession - impact on the firm: report on a survey of 116 firms is a report of a study, undertaken by the Department, on the impact  that the R&D Tax Concession program had on individual firms. Previous studies had looked at the broad economic implications of the R&D Tax Concession to the Australian economy, this was the first to examine how the program impacted at the firm level. The report was released in October 2005.

The study was based on a survey of 116 firms who had or were claiming the R&D Tax Concession and focused on:

  • how the R&D Tax Concession fits into the research and development (R&D) planning and decision-making processes at the firm level
  • its impact on specific projects and overall R&D programs
  • the full range of short-term and longer-term benefits for recipient firms and the nation
  • its impact on firm behaviour, culture and attitudes
  • factors limiting its impact

The study found that:

  • The R&D Tax Concession encourages additional R&D, has a positive impact on the scope and completion time of projects and broader firm behaviour (attitudes, commitment to R&D and project management).
  • R&D collaboration with research organisations tends to increase with the size of the firm.
  • Firms tend to under estimate the cost and time necessary to complete their R&D (this aligns with the delays that AusIndustry experiences with the timing of R&D grants).
  • Most smaller firms undertake their R&D in-house.
  • The R&D Tax Offset is an important incentive for small firms in tax loss, as it encourages them to undertake additional R&D and commercialisation.
  • Strong spillover benefits were found including:
    • 47 percent of firms reported that their R&D is diffused to other business to become the basis of products, processes or services
    • 73 percent reported environmental benefits
    • 83 percent reported human health benefits
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