A planned government crackdown on tax avoidance schemes should have little impact on the software industry, says the New Zealand Software Association.
The IRD last week announced moves to put a stop to mass-market tax avoidance schemes, by which investors claim greater tax deductions than the amount they invested. The IRD says such schemes cost it $436 million in tax credits in 2000.
NZSA president Rollo Gillespie says developers usually fund their projects by mortgaging family assets.
“A lot of innovation is occurring in the areas of funding software development, most of which does not have any tax dependency,” Gillespie says.
If schemes needed tax avoidance for funding, they tended to fail anyway, he says, and could only think of one software developer involved in a deliberate tax avoidance structured scheme. “That was a flaky one-man band and not a member of the NZSA.”
A government review paper on the issue can be found here. Submissions on it close on February 22.