THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell is recommending a suite of reforms to the administration of the Research and Development Tax Incentive (R&DTI), as part of a comprehensive report released today.

The report makes 24 detailed recommendations in relation to the following key themes:

Ø  where compliance examinations or audits are necessary, they should take place as close as possible to the first year of registration of a project; 

Ø  guidance material needs to be comprehensive, clearer and up-to-date and developed in consultation with small business;

Ø  agency record keeping requirements be simplified and take into account commercial practicality for a small business;

Ø  small business must be assisted to help identify and retain professional and responsible R&D consultants.

“It is clear from our investigation that many small and family businesses rely on the R&DTI to help fund innovation,” Ms Carnell said.

“That’s why it is vital to have a transparent and predictable system that works for those businesses conducting research and development.

“We found many small and family businesses were subjected to examination and audit by the two agencies responsible for the delivery of the program – the Department of Industry, Innovation and Science (AusIndustry) and the Australian Taxation Office (ATO).

“In all cases, this compliance activity was retrospective and commenced several years after the relevant R&D was undertaken and the R&DTI refund received and spent.

“Often these affected businesses were required by the ATO to repay the R&DTI in full, with a severe penalty applied," Ms Carnell said.

“This has had a devastating impact on the businesses involved, with some saying they face financial ruin. Others have discontinued or scaled down their R&D efforts in Australia and reduced their R&D staff.

“Most of these small and family businesses were genuine in their belief they were undertaking R&D; their claims were totally justified and they had already invested the money back into the business.

“Small and family businesses my office spoke to reported inconsistent treatment, while R&D consultants expressed concerns about the uncertainty of the R&DTI program and the changing goalposts in the way it is administered.

“Our report found there has been a shift in the interpretation of the R&DTI legislation, narrowing the focus and leading to more claims being rejected, particularly in the area of software innovation," Ms Carnell said.

“Both the ATO and AusIndustry have heard these concerns and have pledged to update their approach to R&DTI compliance checks to ensure better communication guidance and education.

“This needs to be embedded consistently across both agencies’ networks and the ATO and AusIndustry should apply this updated approach retrospectively to the businesses that are in the midst of an audit or examination.

“The purpose of the R&DTI is to incentivise businesses to invest in research and development.

“For Australian small businesses to continue to thrive, it’s critical they are supported in their R&D endeavours to drive innovation and growth.”

www.asbfeo.gov.au

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THE ANNOUNCEMENT of another fresh legal case against the CFMMEU and two of its officials is a further example of why the Parliament needs to support proposed Ensuring Integrity laws, according to Master Builders Australia. 

The ABCC has confirmed it is taking action based on allegations that the CFMMEU attempted to force a builder to stop using a company because its employees were members of the Australian Workers Union (AWU) and who operated under an AWU enterprise agreement. 

It is alleged that the CFMMEU threatened that concrete would not be delivered to the site, unless they engaged a company who was on their 'list of preferred contractors' and used workers who were CFMMEU members. 

Master Builders Australia CEO Denita Wawn said the allegations, involving threatened delays for construction of a new hospital, represented new lows. 

"While disappointing, these allegations come of no surprise given the long history of bullying behaviour deployed by some organisations and their officials,” Ms Wawn said. 

"But we've reached a new low when allegations involve the construction of a new community hospital.

"If proven, this case will show that building unions are willing to deny the entire community a new hospital just because some workers on site have joined a rival union. That's just wrong,” Ms Wawn said. 

"And this is on top of denying a business and its workers their lawful right to earn a living.

“The community would be outraged to know that if proven, the officials involved face a maximum fine of $12,600. 

"Building unions have been called out by Judges for considering penalties and fines as nothing more than a mere 'cost of doing business' and $12,600 wouldn't even be seen as a light slap on the wrist,” she said. 

"This is why we need the Ensuring Integrity laws – so there are consequences for those who deliberately and repeatedly do the wrong thing,” Ms Wawn said.

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EXPERIENCED chair and non-executive director, Ruth Medd, has spoken out ahead of the Westpac annual general meeting (AGM), saying the directors of Westpac are “clearly not fit for purpose having collectively presided over what has become a catastrophe".

Ms Medd, who co-founded Women on Boards with Claire Braund, made the remarks as a long -term shareholder and advocate for women in the boardroom. She said she would be voting against the re-election of Nerida Caesar and Peter Marriott and would have voted against the re-election of Ewen Crouch, had he not stepped aside.

She said the of the scandal that has erupted following the disclosure of 29 million legal breaches to Austrac, has shown a blatant disregard for ethical culture and behaviour.

“I read with interest the message from chairman in the Notice of Meeting and inferred that remuneration of senior staff and the board has become a proxy for culture at Westpac," Ms Medd said.

“For example: You have presided over a culture where a junior technology employee in Westpac’s Global Transaction Services division did not think it appropriate to report that money transfers with Standard Chartered Bank were not being reported to Austrac; and one where the compliance manager who reported the legal breaches was then moved on in favour of someone with ‘more experience’.

“The bottom line is that by your inaction, your disregard for proper process, your inability to learn from the experiences of others like the CBA and your inability to appreciate changing regulatory flows, you have brought our company into disrepute.”

Ms Medd went onto ask what the board was doing if, as the chairman, Lindsay Maxsted acknowledged in a press conference on 26 November, the board and senior management ‘didn’t have enough focus on operational risk and compliance matters'.

“All directors are on the Risk Committee. Clearly your collective wisdom and judgement was insufficient to discharge your obligations as committee members.”

Thos obligations were, Ms Medd pointed out: "Oversight of risk management; Going beyond what the executives are telling you to looking at emerging risks; Using your worldly experiences to anticipate issues; Appreciating the relationship needed with your regulators and the changing remit of these bodies and yourself as the world globalises apace".

“Were you so arrogant/ unaware or asleep that you did not take prompt action after CBA were fined $700m?" Ms Medd asked.

Ms Medd said the longer serving Westpac directors, those appointed prior to the start of 2018/19 should consider their positions, namely Alison Deans, Craig Dunne and Peter Nash.

“While you are doing that think about the children who have been harmed. And keep thinking about it.“

Women on Boards

Women on Boards has been working since 2006 to address gender inequity in the boardroom and across leadership roles. Women on Boards has been a leading actor in the push to achieve gender balance on boards since 2005; in 2009 setting targets of 40 percent women, 40 percent men and 20 percent either/and or other genders for boards across all sectors.

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell said small businesses delivering disability support services will have less red tape to deal with, now the Federal Government has simplified the NDIS provider registration and audit process.

“The Federal Government has heard our concerns about the disproportionate regulatory burden on some small business NDIS providers and implemented our recommendations accordingly,” Ms Carnell said.

“These welcome changes will particularly benefit small businesses delivering lower risk services such as therapies, home modifications and specialist equipment.

“Importantly the simplified registration process will not reduce safeguards for NDIS participants," she said.

“We welcome certification audit requirement changes that will come into effect from 1 January 2020, and be based on the level of risk associated with the services provided to participants, rather than whether or not they are an incorporated provider.

“This is a win for the lion’s share of NDIS providers who are small businesses, especially those in fields such as speech pathology, occupational therapy and assistive therapy," Ms Carnell said.

“We know small and family businesses have been struggling with the time and costs associated with being an NDIS service provider – audit costs to maintain accreditation were a major contributing factor.

“Small providers don’t have dedicated and separate administration teams to comply with government requirements.

“These changes ensure small businesses can get on with doing what they do best – providing vital NDIS services and growing their business.” 

www.asbfeo.gov.au

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