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Restore the R&D Tax Credit
Wednesday, 24 February 2010, 5:09 pm
Press Release: NZMEA
Restore the R&D Tax Credit
The New Zealand Manufacturers and Exporters Association (NZMEA) is calling for the Government to front up and restore the Research and Development (R&D) Tax Credit. The Innovation Index of New Zealand launched yesterday showed that R&D investment had been flat between 2000 and 2007, and dropped in 2008. John Key’s science advisor Sir Peter Gluckman also described our R&D investment performance as “dismally low.”
NZMEA Chief Executive John Walley says, “With most other countries offering significant tax benefits for R&D activity, is it any surprise that more activity is occurring overseas rather than in New Zealand? Australia has recently introduced a 45 percent tax credit.”
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Gluckman noted that New Zealand had “paid the price” for failing to invest in knowledge-based sectors and went on to ask, “why is that the case?”
“The absence of specifically targeted support for R&D and generally better balance in fiscal and monetary policy spells out why pretty clearly; who would invest in new products or processes when returns are so uncertain?” says Mr. Walley.
“The policy framework has ignored the tradeable sector for years – in the 1990s added value exports grew by 50 percent; for the most of this decade that growth has stalled.”
“We cannot expect better performance from the tradeable sector without investment, and that investment is unlikely until our policies at least match those of our competitors.”
Wednesday, 24 February 2010, 5:09 pm
Press Release: NZMEA
Restore the R&D Tax Credit
The New Zealand Manufacturers and Exporters Association (NZMEA) is calling for the Government to front up and restore the Research and Development (R&D) Tax Credit. The Innovation Index of New Zealand launched yesterday showed that R&D investment had been flat between 2000 and 2007, and dropped in 2008. John Key’s science advisor Sir Peter Gluckman also described our R&D investment performance as “dismally low.”
NZMEA Chief Executive John Walley says, “With most other countries offering significant tax benefits for R&D activity, is it any surprise that more activity is occurring overseas rather than in New Zealand? Australia has recently introduced a 45 percent tax credit.”
Related Stories on Scoop
Pale shadow of the R&D tax credit 11/05/2010
Still No Real Change 09/02/2010
Dismissal of R&D credit proves Govt has no plan 03/04/2009
National’s R&D policy bad news for manufacturing 10/09/2008
R&D tax credit goes live 31/03/2008
Results powered by search.scoop.co.nz More Related Stories >>>
Gluckman noted that New Zealand had “paid the price” for failing to invest in knowledge-based sectors and went on to ask, “why is that the case?”
“The absence of specifically targeted support for R&D and generally better balance in fiscal and monetary policy spells out why pretty clearly; who would invest in new products or processes when returns are so uncertain?” says Mr. Walley.
“The policy framework has ignored the tradeable sector for years – in the 1990s added value exports grew by 50 percent; for the most of this decade that growth has stalled.”
“We cannot expect better performance from the tradeable sector without investment, and that investment is unlikely until our policies at least match those of our competitors.”
When I was talking to the specialist staff at IRD over my claim, I was told that not as many businesses applied for the rebate as they expected. Staff were, however, pleasantly surprised by the calibre and range of research work that the private sector were performing outside their normal business activities. If I had involved a consultant or accountant to file my claim instead of doing this myself after hours, there would have been nothing left over for the business.
However, while filling out the paperwork, I realised that my business had a lot of IP that could be worked on for long-term profit. When talking to an examiner at IPONZ (The Patent Office), he mused that an unusually high number of patents were being worked on at the moment. Not surprising - this was the hoped-for result of the R&D tax credit.
National's policy on the R&D Tax credit removal appears to be driven by their advisors, who assured them that there would be 'marginal expenses' applied by businesses to the credit system, i.e. it would be rorted. Had any of those advisors read the 1 inch thick paperwork for the credit application? One business I know of applied for the R&D credit at some expense, and was audited very carefully by two IRD staff who were flown in. Their application passed, and since then the business has achieved some major foreign exchange earnings with a hi-tech product range. I'd like to see a similar speedy marketing result from any of the CRIs.
We are still working on our R&D projects, a little slower, and finding it harder to get undergraduate students on the TIF scheme, because the number has been pulled right back to just 195 for the whole country. When you consider that many thousands of students are looking for suitable holiday work that complements their degrees, this is unfortunate to say the least.
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