R&D Tax Credits Submission
12 September 2018
To read the full submission, click download PDF.
- The Manufacturers’ Network supports the proposed R&D Tax Incentive scheme in principle, but wants to see a higher credit rate and a lower threshold for eligibility.
- Having said that, for most New Zealand manufacturers, especially at the smaller end, product and process innovation is an integral part of their operations, happening regularly, frequently and often incrementally. Such innovation will (i) struggle to meet the proposed eligibility criteria, and (ii) make it difficult and expensive to separate out eligible expenditure, with the $100,000 threshold creating an additional barrier. Feedback from our members is that many wouldn’t consider making a claim under the proposed incentive scheme, because the perceived insufficient return on investment of their time and money.
- We recognise that for government to directly support innovation activities as described above on an individual-company basis through either grants or tax credits is challenging, whatever form is chosen. The lack of uptake of the current Callaghan Innovation Project Grants provides further evidence for that.
- A change in tax rules to allow for Accelerated Depreciation for (certain types of) machinery and equipment would be a great way to support manufacturing companies that currently face a huge challenge in as much as they have to invest heavily in new (digital) equipment and processes to remain globally competitive, but are struggling to fund these innovations. Such a policy could play a critical role in improving productivity and competitiveness of New Zealand manufacturers.
- Lack of scale is one of the biggest handbrakes on innovation investment in New Zealand manufacturing. We offer to work with MBIE to develop co-investment opportunities for government in collaborative projects and facilities, such as learning factories (a model that has proved to be highly effective overseas) to address this lack-of-scale issue.