R&D businesses big winners from Budget 2018 - MYOB
17 May 2018
The Labour-led coalition Government’s first budget has several positive initiatives that will support innovative businesses says accounting software provider MYOB.
“The big winners from Budget 2018 are businesses investing in research and development,” says MYOB New Zealand General Manager Carolyn Luey.
“It’s important that New Zealand’s economy moves up the value chain. We want to see more businesses involved in R&D because that delivers higher value jobs and more innovation.
“The government should be commended for its goal of lifting national R&D spending to 2 percent of GDP, up from 1.3 percent now. New Zealand cannot afford to fall behind, given the OECD average is 2.4 percent.
Budget 2018 puts $1 billion of operational funding forward for the R&D tax incentive, allowing businesses to claim 12.5 cents back for every dollar they spend on R&D. The incentive will be available for all businesses spending more than $100,000 on R&D.
“We would encourage all businesses who are involved in R&D to engage with the government’s consultation document currently out for feedback on how the tax incentive scheme should be designed,” says Ms Luey.
“For example, further consideration needs to be given to how to support start-up and high-growth companies. These businesses might currently be making a loss and therefore not paying tax, but should be incentivised to invest more in R&D.”
MYOB’s Business Monitor Survey of more than 1,000 local small to medium businesses found 36 percent do not budget for R&D, while 29 percent spent less than 1 percent of their revenue on product or service innovation (see table).
What percentage of revenue (or sales) does your business spend on research and development?
|Less than 1%||30%||28%||18%||28%||29%|
|1 per cent||6%||5%||12%||10%||6%|
|2 per cent||4%||5%||11%||10%||5%|
|3 per cent||3%||8%||1%||0||4%|
|4 per cent||2%||4%||7%||12%||3%|
|5 per cent||5%||4%||6%||9%||5%|
|Greater than 5 per cent||5%||6%||8%||7%||6%|
|We don't budget for product/service development and innovation||39%||33%||30%||13%||36%|
The budget comes as small business owners take a wait-and-see approach to the performance of the new government. According to the Business Monitor, 42 percent of business owners are neither satisfied nor dissatisfied with its performance, 26 percent are satisfied, while 30 percent are dissatisfied.
“We know business confidence has taken a hit recently. Our Business Monitor also showed that expectations for the economy fell from an overall net positive 21 percent just over 12 months ago, to a net negative 14 percent in the latest survey, although owners rated their own firm’s prospects more positively.
“With this backdrop, and considering increasing costs for small businesses in the forms of increasing wage pressures, it would have been good to see movement on issues like tax rates for business. We face the real prospect of a gap opening in tax competitiveness with Australia with its government looking to reduce business tax rates further,” says Ms Luey.
In Australia the corporate tax rate for businesses earning up to $10 million in revenue sits at 27.5 percent, with those above paying 30 percent. The goal is to reduce company tax rates down to 25 percent for all businesses by 2026-27. New Zealand business all currently pay 28 percent.
Other important initiatives of Budget 2018 to business include:
For further comment or other information please contact:
Conor Roberts, MYOB NZ Communications and Public Affairs Manager
M: +64 21 124 6004 / E: firstname.lastname@example.org
MYOB (ASX: MYO) is a leading cloud based business management solutions provider. It makes business life easier for approximately 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and in 2015 was awarded the BRW award for the most innovative large company for 500+ employees and placed 2nd in BRW’s Most Innovative Companies Award list across all categories nationally. For more information, visit myob.co.nz or follow @MYOB on Twitter.