R&D tax breaks on the way?

A move toward additional tax relief for research and development appears to be closer.

A move toward additional tax relief for research and development appears to be closer.

Earlier this year a system of grants was set up, with the government signalling it was opposed to additional tax concessions. Now a party of officials “has been commissioned to look at additional options in this area," says a tax specialist in the office of finance minister Michael Cullen, David Carrigan.

Any new policy could not be called a change in direction, Carrigan says. Rather, it would be a broadening of avenues for funding. “The grants system has been set up and will continue to be there.”

Before tax breaks are approved, the minister has to be satisfied that “the fiscal danger is not too high”; that they will not result in vast sums disappearing from the tax take, in particular by people misrepresenting other areas of expenditure as “R&D”, he says.

Carrigan says there are already tax concessions. Development expenditure is tax-deductible, once it has been capitalised into a project. Pure scientific research – “provided you can prove it is scientific research” – is deductible at the time the expense is incurred.

The officials are expected to report back to the minister this month.

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