Despite the significant financial costs associated with transitioning to an innovation culture – one of the key trends identified through our 2015 Technology Fast 50 program and a continuing challenge for business – 2016 saw a post-election legislated 1.5% reduction in the rate of the R&D tax incentive as part of the government’s cost saving measures. As we near the finale of the 2016 Deloitte Tech Fast 50 competition, and the close of 2016, it is timely to consider what further tax developments we can expect in 2017 which will affect innovative rapid growth tech companies. In releasing the ‘Review of the R&D Tax Incentive’ on 28 September 2016, the government has confirmed a second wave of the National Innovation and Science Agenda (NISA), the details of which will be announced in the first half of 2017. Based on the recommendations that were made by the review panel, what could small rapid growth tech business expect? Positive recommendations made include a proposal to retain the existing definitions of R&D activities and provide additional clear guidance. This will be especially useful for technology related R&D activities where uncertainty still remains. Consultation is also occurring regarding how to streamline and improve the administration of the R&D Tax Incentive program. However the most relevant of the six recommendations to Tech Fast 50 businesses is the move to restrict the refundable R&D tax offset to A$2m per annum, with any other offsets to be treated as a non-refundable tax offset carried forward for use against future taxable income. Whilst later stage financing for technology ventures is gradually improving in Australia, this recommendation, if enacted, would exacerbate the issues faced by high growth pre-revenue technology companies in efficiently financing innovation programs. Although this recommendation does run counter to the prior policy objective of better supporting SMEs undertaking R&D when in a loss position, budgetary concerns may yet see some companies experience material decreases in the cash available to fund further R&D / innovation activities. Another recommendation to watch is a proposed ‘intensity threshold’ for the non-refundable offset. Some R&D activities are held to be ‘business as usual’ and only expenditure in excess of a threshold in the order of 1% to 2% of business expenditure will attract the R&D benefit. This recommendation will create uncertainty year-on-year and be complicated to administer. It will also requires companies to generate and retain contemporaneous supporting R&D documentation, with perhaps little or no potential claim even being available at the end of the process. It remains to be seen whether, after the consultations period, the government will pursue these recommendations, or seek alternative methods of cost savings that may impact high growth pre-revenue companies in Australia. The events of 2017 will merit watching with a close eye.