However, Andrew Dickeson, Director Taxation Services, Staples Rodway, and Head of the Tax Committee for global accounting body CPA Australia, said the new law was not enough to make significant changes in business investment.
"I think people will be slow to change their approach to R&D based on this," Dickeson said.
"It's more a case of people seeing it as a bit of interest-free money they can tap into but it won't cause a wholesale change in people thinking, 'Right, let's put a whole lot of money into R&D now'," he said.
"We've lost so many good companies over the years going offshore because if they go off to Singapore or even to Australia they get much better incentives."
Under the proposal, a company could claim up to 28 per cent of its tax losses from R&D back in any year as long as it met the requirements; including being a loss making New Zealand company with a sufficient proportion of R&D investment.
Joyce said the new policy had to be taken in context with other R&D tax measures which would collectively lift spending in the area.
"You can't just say we don't like this one policy because it doesn't go far enough without looking at the R&D growth grants, for example, and what's being done in the incubation accelerator area," Joyce said.
"You have to take those things as a group and then say OK as a whole is it going to lift the R&D investment by firms, and what we've done is target different measures to different firms and I think that's appropriate."
Dickeson said the programme was a step in the right direction but insufficient overall, particularly given the exclusion of expenses incurred outside New Zealand.
"R&D companies can't count activities outside of New Zealand and the argument was, which was quite valid, that New Zealand is so small often you had to go overseas to obtain specialised skills and knowledge," Dickeson said. "It seems unfair particularly for start-ups, when a lot of their costs are in the airfares and travel and meeting with these overseas consultants."
Joyce said he was confident the new measures would make a difference to start-ups and encourage further R&D spending as evidenced by recent Statistics New Zealand figures that showed it was up $53 million since the last survey in 2012 to $1.2 billion in 2014.
"This is very much about research and development and that's what we've framed it around," Joyce said. "There are other ways of assisting companies in terms of their offshore marketing."
The proposed changes would apply to any income received from the start of the 2015 financial year.
R&D tax policy
• Tax credit up to $500,000 per year increasing to $2 million in the next 5 years.
• Companies must be NZ based for the full year.
• Crown owned or publicly listed companies are not eligible.
• Company must have a net loss and significant R&D spend.
• Expected to be $15 million per year across 250-350 start-ups.
