18 May 2005

Research and Development Statistics

According to the results of the Research and Development survey 2004, total research and development (R&D) expenditure in the 2004 period was $1.6 billion.

R&D spending in the 2004 reference period comprised private sector expenditure of $648.1 million, government sector (excluding universities) expenditure of $498.4 million, and university expenditure of $454.8 million.

Total R&D expenditure has grown to 1.17 percent of New Zealand’s gross domestic product (GDP) in 2004, which is a relatively low figure by international standards. Australia reported R&D expenditure as 1.62 percent of GDP in 2002, while the OECD average was 2.26 percent.

A full, detailed report is expected to be released in July 2005 on the results from the 2004 R&D Survey. For more information Read Statistics NZ Website

IRD is Removing Barriers to R&D Investment

Companies that bring in new equity investors will have better access to tax deductions for R&D expenditure under tax changes to come into effect from this year. The new rules for R&D investment will be included in a taxation bill to be introduced this month. Once enacted, the new rules will apply from the 2005-06 income year. See IRD Policy

Technology companies, in particular, often have a long lead-in period in which they incur major expenditure before realising income from it. Under current law, however, they can lose R&D deductions if they bring in extra investors after their initial development stage.

The changes will cater for the growth cycle of technology companies and remove a barrier to R&D investment by allowing R&D deductions to be matched with income from that expenditure. Taxpayers will be able to allocate certain R&D tax deductions to income years after the year in which the related expenditure is incurred. Deductions will not be lost if there is a shareholding change between when the expenditure is incurred and when the deduction is recognised by the taxpayer. The tax treatment will be optional.