R&D changes a boost for business in election year Budget
15 May 2014
R&D changes a boost for business in predictable election year Budget
“Two new tax measures to support research and development (R&D) confirmed in today’s Budget will bring benefits for business,” says New Zealand Institute of Chartered Accountants (NZICA) General Manager - Tax, Peter Vial.
The first will assist cash flow by allowing loss making
start-up companies to cash out all or part of their tax
losses from R&D expenditure. Eligible companies will
receive cash rather than have to carry forward their
The second addresses R&D expenditure that currently falls into the black hole of being neither depreciable nor deductible.
“While NZICA welcomes these two measures we’re keen to ensure that the rules are straightforward so that businesses undertaking innovation are not subject to undue compliance costs,” says Mr Vial.
Overall the Budget is responsible and predictable, continuing the steady as she goes approach of this Government. It achieves the Government’s long-standing objective of a return to surplus and reinforces the focus on fiscal prudence and net Crown debt reduction (to 20% of GDP by 2020).
“It is no surprise that there are no major tax reform proposals. The Government has stuck firmly to its commitment to maintaining the current tax base and not extending it,” says Mr Vial.
Inland Revenue receives an additional $48.6 million over five years to bolster its tax compliance activities. The initiative is expected to generate nearly $300 million more in tax collections.
“This is a welcome move given the effect non-compliance by some taxpayers has on all taxpayers,” says Mr Vial.
Finance Minister Bill English has focused on big ticket issues in the Budget such as support for families with babies and young children including increased paid parental leave, building a more productive economy, delivering better public services and the Christchurch rebuild.
“Likely to be well received are signalled reductions in ACC levies including a potential decrease of $130 a year in the motor vehicle levy.”