Google Australia Wants To Overhaul The R&D Tax Credit To Benefit Local Start-Ups

Google Australia Wants To Overhaul The R&D Tax Credit To Benefit Local Start-Ups

The Australian Federal Government isn’t doing enough to foster start-ups in Australia. At least that’s the view of Google Australia’s managing director Maile Carnegie, who feels that current activities could be re-targeted to help local start-ups grow.

Set against the backdrop of the corporate tax avoidance inquiry held in Sydney today, Google Australia’s Carnegie said in her opening remarks that the Research and Development Tax Credit designed to stimulate start-up development in Australia should be overhauled.

The incentive currently provided by the Federal Government gives companies that work on R&D in Australia tax breaks to encourage them to keep business in the country, rather than take it to a competing economy like Canada or Singapore.

Carnegie warned that the credit itself isn’t as effective as it could be:

There is some thinking to be done around the R&D tax credit. My worry is that it’s being used for business activities that would have occurred anyway. Google currently gets this credit, and our teams here work on innovative projects. But it is not the primary reason we invest in R&D here.

These incentives can certainly be better targeted at smaller tech start-ups so that an entrepreneur working in a garage in Hobart or Adelaide has a greater chance of building the next Google.

A battery of questions fired at Apple Australia, Google Australia and Microsoft’s international taxation representative meant that Carnegie was unable to expand on her point. Labor Senator Sam Dastyari praised Carnegie for her words, and apologised that they weren’t able to talk further during the session about it.

Recent changes to the R&D tax credit designed to stimulate start-ups and Aussie innovation have recently been panned as “a drag” by others start-up industry watchers.

What should Australia do to stimulate local start-ups? Tell us your thoughts in the comments.