Media Release 2 June 2000

Full r&d expensing wanted, as Government pledged

The excuses for not allowing the full write off of r&d costs against tax are not good enough, says the Employers & Manufacturers Association (Northern).

"The Government's pre election pledge was that it would allow the full expensing of r&d in the year they were incurred," said Alasdair Thompson, the association's chief executive.

"This is the least that business needs in this area. Government has a mandate to introduce this change. It should not be swayed by its advisors in Treasury and Inland Revenue that business will abuse this measure.

"We do not accept it would in any way compromise the tax base. Business undertakes r&d in any case, as it must to remain competitive, but calls it something else for tax purposes.

"Then, when surveys show our private sector is lagging behind other countries on its r&d spend, since it is called marketing or customer development or something, business is lambasted by Government for not investing enough in r&d.

"Australia allows 125% tax expensing of r&d costs and the UK now allows 150%. Our business wants is a minimum of 100%, without further threats by IRD that it will require the full capitalisation of research in the same year the research is done.

"The silliness goes on and on. The message this sends to investors is that New Zealand is unfriendly to innovation. Even the previous Government finally got around to promising it would allow r&d expenses to be fully written off if it were to be re-elected.

"The Government has a mandate to introduce this simple measure, and business expects it to honour this mandate with the same enthusiasm it showed over ACC and the Employment Relations Bill.

"We will keep on about this, as we have for years already, until some common sense is restored in this area."

Further comments : Alasdair Thompson Phone Bus 09 367 0911 Home 09 303 3951 Mobile 025 982 024

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