New Zealand


  • Service: Tax
  • Type: Business and industry issue
  • Date: 13/11/2013

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Gwenan Riley

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John Cantin

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Darshana Elwela

National Director - Tax

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Government 2014-15 tax policy and “black hole” R&D proposals 

November 2013 Issue

The Government has released its tax policy work programme for the next 18 months.
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The key focus areas are:

  • Further improvements to tax and social policy rules, including a review of tax rules for annuities, closely-held companies and measures to improve growth and innovation, such as the R&D proposal below.
  • International tax reform, including an active income exemption for branches, mutual recognition and various items on the recent OECD tax action plan.
  • IRD’s business transformation to deliver a 21st century tax system.

The new tax policy work programme contains no major surprises, with a number of the items cementing previous policy or already foreshadowed. However, IRD’s ambitious business transformation project will have significant implications, not just for Government, but for businesses and how they interact.

The Government also released a discussion paper aimed at dealing with certain non-deductible/depreciable (“black hole”) capitalised R&D expenditure. The proposal is to make such costs either depreciable (if they relate to a successful R&D project) or immediately deductible (if unsuccessful). The Government is also proposing to clarify the rules for depreciating internally developed software. We support the R&D black hole proposals, which will remove a significant tax cost to undertaking R&D and improve certainty about the tax profile of projects.

Taxmail discusses both recent developments.


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