To reduce complexity, ambiguity and compliance burden, the IBCC should utilise the ‘active business’ test proposed in the initial consultation paper, rather than the ‘predominant activity test’ proposed in the draft legislation.

To avoid unintended and perverse incentives for companies and investors who successfully commercialise innovations, the predominant activity test should be removed from the disqualified assets provisions.

Treasury and DISR should investigate potential legislative interactions between the proposed IBCC and RDTI reforms concurrently under consultation, as changes to the RDTI scheme may have impacts on the operation of the IBCC principles-based innovation test