The Government has held onto submissions to its research and development tax credit proposal for three months and there’s no sign yet that it has tackled the inequities, National’s Research, Science and Innovation spokesperson Parmjeet Parmar says.
“In the current version of the Government’s plan, firms currently spending less than $100,000 don’t qualify for the same credit as larger companies. That effectively rules out the big companies of tomorrow because it puts a hurdle in front of small businesses today.”
“It makes no sense to treat one dollar of R&D spending any differently to another dollar just because a business is small. If anything, they are the group with the most to gain because small businesses can be hand-to-mouth as they seek to stay afloat and grow.
“The Government needs to abolish the $100,000 threshold and also needs to find a way to deliver some form of assistance for start-ups that may undertake large amounts of R&D but are yet to record a positive cash flow. Currently, they’re entitled to growth grants.
“Businesses, particularly start-ups, need certainty because they tend to be investing for the long term. Often they need to know what the business environment will be like for next 3-4 years to have the confidence to invest.
“Megan Woods pushed out the deadline for the Bill by a month but her officials will still be under pressure. It is now expected in October to be enacted by April 2019.
“Ms Woods is in a difficult position because the current design of the policy has already been costed in Budget 2018 at $1 billion over the next four years.
“Removing the $100,000 threshold and/or extending growth grants now will significantly increase the cost of the policy and put further strain on the Government’s Budget Responsibility Rules, which it already looks like breaching.