New Zealand Research, Science and Innovation Minister Megan Woods shared that Technology Incubators will be receiving an extra NZ$ 9 million in Government funding to support businesses to scale up and commercialise their ideas.
According to a recent press release, the new funding injection demonstrates the Government’s commitment to promoting the commercialisation of advanced technologies from New Zealand’s public research organisations.
The funding announcement is on top of the NZ$ 25.5 million support allocated in Budget 2019 for initiatives to promote the commercialisation of innovation.
The Government has already introduced the 15% R&D tax incentive through Budget 2018. In addition, the refundability measures were announced more recently.
This means that pre-profit business will be able to get cash back, which is of more use to them than a credit.
The Government is committed to building a modern economy and that means supporting innovators in the early phases of their business development.
Callaghan Innovation has a great track record of supporting successful start-ups.
And as the government’s innovation agency, their incubator programmes have produced 45 new start-ups and attracted more than NZ$ 50 million in private capital, making a strong case for continued Government investment.
An RFP process is currently underway to select incubators that are internationally connected, backed by sufficient capital and focused on pathways to global markets.
This NZ$ 9 million dollars of additional funding over three years has been allocated specifically to the Technology Incubator Programme as part of a recent budget reprioritisation package.
Other Government start-up initiatives
In other news, the Coalition Government is backing Kiwi companies to innovate and grow by making it easier for them to invest in new assets and business models, and giving start-ups a better shot at success.
As part of the release of the Government’s Economic Plan, Finance Minister Grant Robertson and Minister for Small Business and Revenue Stuart Nash announced the removal of two barriers to expansion faced by businesses.
At present, the costs associated with exploring whether to invest in a new asset or business model are often not deductible for tax purposes.
This can deter business owners from spending money looking at better ways of doing things.
Benefits for start-ups
Changing this will allow businesses to deduct ‘feasibility expenditure’ from their tax bills, including for projects that do not end up going ahead.
Minister Nash says the current rules are particularly problematic for infrastructure companies. Hence, this change will help unlock investment.
To keep it simple and reduce compliance costs, particularly for small and medium businesses, the proposal is to qualify expenditure totalling less than NZ$ 10,000 to be deductible immediately.
Deductions will be able to be spread over five years.
This measure will be included in a taxation bill to be introduced into Parliament early next year, which means the change can kick in from the start of the next tax year.
The second proposal announced will change New Zealand’s ‘loss continuity rules’ to make it easier for start-ups to attract investment and get off the ground.
As the rules currently stand, a firm that suffers a loss one year can use that loss to reduce its taxable income in the future.
However, the rules do not work well for start-ups who are trying to attract new investment.
As these start-ups attract new investment they often breach the threshold under which they can continue to use these losses.