IRD Commissioner Takes Interest In R&D Law
The Commissioner of Inland Revenue will be taking a personal interest in how his department applies the new Research and Development law once it is enacted.
"The new Inland Revenue Charter, launched earlier this month, emphasises the importance I place on the department applying the law as it is enacted,” said Commissioner David Butler.
“Under the new bill what is properly expensed under accounting rules will be deductible under tax rules.
"Consultation with the private sector during the development of the R&D proposals indicated that some people are concerned that Inland Revenue might take a restrictive interpretation of the new law. In particular, they wonder if what is clearly R&D expenditure at the time it is incurred might later be challenged by Inland Revenue on the basis that the research has been a success and has led to commercial production.
"That concern is unfounded. What will happen in practice is that Inland Revenue auditors will take into account the information available to the decision-maker at the time, and will challenge the original decision to expense only when it is clearly not sustainable.
"To reassure the business community I am going to take an active role in liaising with business on the application of the new R&D legislation. Should there be problems with its application, I'm available to the private sector to discuss and correct them.
"Once the legislation is enacted, Inland Revenue will provide information to the community on the new provisions. We will publish a detailed Tax Information Bulletin on the new legislation, and I will be consulting with tax professionals and other interested parties on other kinds of information they would find useful," Mr Butler said.