Tax changes enacted last night excluded any additional changes to the R&D tax incentive scheme.

The Senate decided to reject the proposed 1.5% cut to the offset rates (from 1 July 2014) that the Government had initially announced in last year's Budget.

This means there will be no immediate reductions to the tax offset rates for the R&D Tax Incentive Program which is good news for driving innovation in business and keeping business in Australia.

At the time of the Budget, it had been calculated that these proposed revisions (from 45% to 43.5% for the refundable tax offset, and 40% to 38.5% for the non-refundable tax offset) would lead to a saving of $550 million over four years.

But their exact impact is complicated by the delayed progress of the legislation, and by a series of other recent alterations to tax policy. These have included the abolition of the Government’s Paid Parental Leave policy; the release of the draft changes to the treatment of employee share schemes; the likely imminent introduction of a two-tiered corporate tax rate; and a separate cut to this program of $1.4 billion over four years through the introduction of a new $100 million annual expenditure cap.

In October 2014, PwC argued in a submission to the Senate Economics Committee that the proposed reductions to the R&D offset rates were problematic for a number of reasons and that they accordingly should not pass the Parliament.

An important part of the Australian economy is research and development in new technologies, we need to have long-term predictable policies which encourage people to invest and the tax reform white paper process is a good opportunity to get this right.