Key Takeaways

• Leading Australian biotech organizations urge a review of the government’s proposed changes to the Research & Development Tax Incentive and CGT reforms.
• Concerns include a proposed 10-year cap on refundable RDTI and the impact on investment in early-stage life sciences companies.
• The life sciences sector in Australia supports over 350,000 jobs and is a vital contributor to the economy.

Calls for Review of R&D Tax Changes

BioMelbourne Network, in collaboration with AusBiotech and other top Australian biotech organizations, is pressing for an urgent reassessment of the Federal Government’s proposed modifications to the Research & Development Tax Incentive (RDTI) and the reforms regarding Capital Gains Tax (CGT). The organizations have formally addressed their concerns to Treasurer Jim Chalmers, highlighting potential negative impacts on investment, health innovation, manufacturing, and job creation.

The proposed cap of ten years for refundable RDTI fails to align with the realities of health technology development. According to their analysis, the government’s own strategies acknowledge that bringing innovative health solutions to patients often exceeds the decade-long timeframe. This discrepancy raises serious questions about the feasibility of such a cap.

Furthermore, the suggested alterations concerning the classification of supporting R&D activities could undermine critical aspects of research. Many functions considered supporting, such as product manufacturing for Australian clinical trials, are fundamental to conducting effective R&D. This could result in significant setbacks for companies working toward innovative solutions in healthcare.

The proposed CGT reforms are also viewed as problematic. They may further restrict investment in early-stage, high-growth life sciences companies and complicate the recruitment of specialized talent in a market where competition is already fierce.

The life sciences sector in Australia employs over 350,000 individuals and encompasses nearly 3,000 organizations. Moreover, since 2016, it has been the largest value-add export industry outside of primary industries, underscoring its importance to the national economy. The organizations collaborating on this initiative include BioMelbourne Network, AusBiotech, Pathology Technology Australia, MTPConnect, ANDHealth, Life Sciences Queensland, Life Sciences WA, BioNSW, and ARCS Australia.

The letter sent to the Treasurer aims to ensure that the necessary adjustments are made to promote sustainable investment and innovation within Australia’s life sciences industry.

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