Why R&D tax incentives don’t stack up for SMEs

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Jacinda Ardern's plan doesn't offer much for small businesses. Photo: Nikki Mandow

Jacinda Ardern is putting her faith in R&D tax incentives to lift New Zealand’s productivity and level of innovation reports Nikki Mandow for Newsroom.

She argues the government’s own numbers suggest little benefit from the much-lauded credits - when it comes to our small business sector at least.

Prime Minister Jacinda Ardern put productivity and innovation centre-stage when she outlined her government’s big “Plan for a modern and prosperous New Zealand” at the weekend.

The coalition’s four-point plan to “encourage innovation, productivity and build a skilled workforce better equipped for the 21st century” showed precious little to bolster small businesses, which make up 97 percent of our companies and 28 percent of our GDP.

Three of the four areas - free trade agreements with the UK and Europe, modernising the Reserve Bank, and liaising with the unions - are likely to have only a peripheral impact on companies with under 20 employees.

Instead, her coup de grace is the (much-heralded already) introduction of R&D tax incentives - “a key component of building a new innovative economy”, Ardern says.

Under the scheme, which begins in April 2019, companies spending at least $100,000 a year on R&D in New Zealand can get a 12.5 percent non-refundable tax credit.The plan, according to MBIE, is that more R&D equals higher value businesses, and a chance to "ensure we are living up to New Zeaand's - read on . . . .