JIM CHALMERS MP
TREASURER

SENATOR TIM AYRES
MINISTER FOR INDUSTRY AND INNOVATION

The Albanese Labor Government is backing business innovation and investment through landmark tax reforms as part of the Budget’s productivity package.

Australia is a world leader in innovative ideas and business success stories and we are ensuring that will continue.

New tax incentives will encourage more entrepreneurship and back hundreds of millions of dollars in new research and development for young firms and start‑ups.

The Government’s productivity package will reduce regulatory costs by $10.2 billion a year, boost long‑run GDP by around $13 billion a year through work underway with states and territories, and promote $400 million in additional R&D among young firms.

We will also consult with stakeholders on key details of the Government’s capital gains tax reforms, including the treatment of early‑stage and start‑up businesses given the unique features of the tech and start‑up sector.

New measures to promote innovation include:

• Introducing two‑year loss carry back for all companies up to $1 billion in turnover from 1 July 2026 to encourage investment and sensible risk taking.
• Introducing loss refundability for start‑ups from 1 July 2028, to help new businesses invest and grow in their first two years.
• Expanding tax incentives for venture capital from 1 July 2027, to encourage more investment and unlock patient capital for young, growing firms.
• Better targeting the Research and Development Tax Incentive from 1 July 2028, increasing offset rates for core R&D by around 25 to 50 per cent, increasing the turnover threshold for the refundable tax offset, reducing the intensity measure and increasing the maximum expenditure threshold.
• Making the $20,000 instant asset write‑off permanent, to support small businesses to invest and keep compliance costs low.

These measures, alongside governance reform and investment in national science capability, are the first steps in responding to the comprehensive review of research and development, Ambitious Australia.

The Budget will also back in public sector research and maintain the specialist measurement services that Australian businesses rely on to grow and innovate.

We know public sector research often generates private sector opportunities and breakthroughs.

Over the forward estimates, we have committed to more than $39.1 billion to support R&D through a range of avenues including higher education programs, grants, scientific organisations, defence capability and agricultural research.

We are establishing the National Resilience and Science Council to better coordinate and align public innovation investments with Australia’s economic objectives.

The Council will better connect work across science, technology and industry, and support long‑term reform of Australia’s research and industrial capabilities.

The Budget also strengthens Australia’s science capability, critical to delivering a Future Made in Australia, including support for research, innovation and science institutions:

• $387.4 million for the CSIRO to support its internationally leading research, and additional funding for work on biosecurity to safeguard Australia’s agriculture sector.
• $273.0 million for the National Measurement Institute, which underpins vital trade and transactions and supports consumer confidence.
• $21.7 million funding for the Australian Space Agency to continue delivering its core functions as part of fostering a local space sector that lifts the broader economy and improves the lives of Australians.
• Funding to continue building the Square Kilometre Array, the world’s most ambitious radio astronomy project, to answer fundamental scientific questions and develop new technologies.

This is all part of our plan to boost innovation and investment, support job creation and create a more productive and resilient economy for everyone and that’s what this Budget will do.