R&D incentive gap widens against global competitors
Australia's Federal Budget 2026 increased R&D tax incentive rates, but deep tech founders say it falls short for early-stage hardware companies. The changes arrive as Ireland lifted its R&D tax credit from 30% to 35% and raised first-year refund thresholds to €87,500, targeting SMEs. The US One Big Beautiful Bill Act restored immediate expensing for domestic R&D costs from 2025, ending amortisation requirements.
Sam Ringwaldt, co-founder of Conry Tech (raised $3M in October 2025), has built deep tech in Australia for six years. His take: the budget supports incremental efficiency for scaled companies, not exponential potential from startups commercialising hard technology. "This is the very end of the innovation spectrum that must be supported if we are serious about building a Future Made in Australia," Ringwaldt wrote.
Trust taxation hits founder comp structures
Budget 2026 also changed family trust taxation. Ringwaldt argues this is "incredibly detrimental to the financial circumstances of most deep tech founders." Many founders structure comp through trusts during pre-revenue years while burning capital on R&D.
The government claims the R&D changes will unlock 20% more business R&D per dollar of tax offset. Ringwaldt counters: the multiplier sits with new companies building new IP and manufacturing capability from scratch, not established players optimising existing operations.
ANZ trails on R&D generosity
Australian startups and SMEs (typically sub-50 headcount, under $10M revenue) compete globally for talent and capital. Ireland and US hubs now offer stronger R&D incentives. Australia risks pushing local innovators offshore or into FDI dependence.
Worth noting: Ireland simplified qualifying employee costs to 100% emoluments if staff spend 95%+ time on R&D. The US change enhances cash flow alignment with credit timing. Australia's approach targets large companies already operating at scale.
The budget positions R&D support as productivity policy. For deep tech founders carrying bags of capital risk before first revenue, the structure misses the mark. Real innovation requires real capital before it generates real pipeline.