NZCS welcomes tax deductibility for software

NZCS welcomes tax deductibility for software

PRESS RELEASE – NZ Computer Society Inc. (NZCS)
22 June 2011
For Immediate Release

The New Zealand Computer Society (NZCS) today welcomed Minister for Revenue Hon Peter Dunne’s announcement that failed software projects will retain their tax-deductible status and sees this as a very important step in ensuring New Zealand’s economy continues to be strengthened on the back of innovation and investment in technology.

NZCS Chief Executive Paul Matthews said today “The New Zealand Computer Society recently highlighted the IT sector’s very serious concerns in relation to the recent announcement that failed software projects could lose their tax deductibility. We strongly congratulate the Minister and IRD for acting on this so promptly, thereby providing certainty to the sector and New Zealand”.

The Inland Revenue Department recently released a determination that re-interpreted the deductibility of failed software projects and found that in some circumstances software projects that failed could never be treated as a business expense – either in the year they failed or in subsequent years through depreciation.

“If this determination remained it would have had a very significant effect on the willingness of companies to invest in software and especially in relation to smaller local software providers”, Matthews said.

“This is not a minor matter – this decision has the effect of safeguarding investment in software which will see our economy grow through increased innovation, efficiency and productivity”, Matthews said. “It’s excellent that the Minister has heard the concerns of the technology and business sectors”.

Matthews also welcomed the news that the issue would be resolved promptly and backdated to the date the previous determination took effect, thereby providing certainty to the business community.

“This announcement sends a loud and clear message that investment in software and innovation is a priority for New Zealand”, Matthews said.

ENDS

Original IRD Notice:
http://www.ird.govt.nz/technical-tax/general-articles/ga-tax-treatment-unsuccessful-software-dev.html

Dunne’s announcement today:
http://taxpolicy.ird.govt.nz/news/2011-06-22-software-development-costs

About the NZ Computer Society

NZCS is the professional body of ICT Professionals, and as a non-profit incorporated society works with industry, academia, Government and the wider community to achieve its mission of increasing the education, standards, professionalism and innovation of the New Zealand ICT profession, and the base-level computing skills and confidence of New Zealanders.

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