Media Release October 24th, 2000

R&D move accentuates the positive, at last

Finance Minister Michael Cullen's announcement today that the rules governing the tax treatment of R&D expenditure are to be aligned with "Generally Accepted Accountancy Practice" is a useful first step, says the Employers & Manufacturers Association (Northern).

"We are pleased Government is beginning to honour its pledge with regard to how businesses can treat their R&D costs," said Alasdair Thompson, EMA's chief executive.

"Even more promising is the discussion paper Dr Cullen is having prepared on the topic.

"We are optimistic Government will allow R&D to be treated in the same way that other business expenses are, and written off in the year they are incurred.

"All other developed countries we know of allow this. Countries such as Canada allow tax credits for firms spending on R&D, while others such as Australia allow R&D costs to be written off at 125 per cent of their costs.

"We don't expect that here, though we do expect New Zealand to match other countries to encourage R&D work. New Zealand has been alone in not doing this for many years."

Further comments: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme) 025 982 024

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