An update on the R&D Tax IncentiveHon Dr Megan Woods Research, Science and Innovation
Over the past few months I have had the pleasure of meeting with businesses of all shapes and sizes to discuss our plan to introduce a research and development (R&D) tax incentive.
We have an ambitious target to lift our lagging economy-wide spend on R&D from 1.3% to 2% of GDP over the next 10 years – and the R&D tax incentive will be a key lever in reaching this goal.
Lifting the amount Kiwi businesses are spending on R&D will help diversify our economy by encouraging new industries and businesses to innovate. The R&D tax incentive will be one form of support amongst many for Kiwi firms to move further up the value chain and deliver higher wages.
As we are nearing the business end of getting the R&D tax incentive into legislation, I would like to quickly provide you with an update on progress to date and our next steps.
When we launched the consultation period earlier this year, we made it clear that our priority was to assist as many businesses as possible to undertake more R&D, and give them the consistency and confidence to innovate. I am pleased to say that we are on track to deliver on this priority.
During the consultation period we received useful feedback and insights, and I’d like to thank everybody who took the time to share their knowledge and experiences with us. We listened with an open mind to your ideas for how to make the R&D tax incentive a world-class, open and efficient system to increase New Zealand’s R&D.
Officials are now busy producing final recommendations on the design of the scheme.
There will be further opportunities to have your say on the design of the R&D tax incentive during the select committee process later this year.
Legislation will be introduced in October 2018 so the R&D tax incentive can be in place by 1 April 2019. Eligible businesses paying tax will be able to benefit from this policy from day one.
Over time, we intend to have a full package of support for New Zealand’s Innovation system, including support for start-ups.
We recognise it is vital to have the right kinds of support in place for pre-profit businesses that are in tax loss or those that have insufficient taxable income to benefit from a tax credit. We have listened to your concerns that R&D intensive firms and start-ups won’t be able to benefit from the incentive.
The policy issues involved in supporting companies in tax loss through a tax incentive are complex, but we are committed to having a solution in place by April 2020.
In the meantime start-ups and businesses in tax loss can continue to get support from the range of grants and incubators from Callaghan Innovation.
Again I’d like to thank everyone who has taken part in this process to make the R&D tax incentive a success for New Zealand businesses. I look forward to updating you again in the near future.