KEY POINTS:
Technology investor Peter Maire has defended a rule in the Budget's research and development tax break which says the 15 per cent credit does not apply to companies that spend less than $20,000 on R&D.
Under the scheme, research and development expenditure conducted mainly in New Zealand will be able to claim a 15 per cent tax credit, starting next year.
But to be eligible, companies must spend $20,000 on R&D in the year the claim is made, unless the work is outsourced to a listed research provider. The threshold has drawn criticism for potentially discriminating against cash-strapped start-ups.
"If you are seriously doing R&D with the ability to do what New Zealand needs - and that's to get the stuff commercialised globally - then you're not messing around doing $20,000 projects," said Maire.
"You are probably at minimum doing $200,000 projects."
Maire, whose investments include Cadmus, Fusion Car Audio, Orion Healthcare and Rakon - all with multimillion-dollar R&D spends - called the credit a "huge step in the right direction for those companies".
Research showed that every $1 a company spent on R&D resulted in $10 revenue over three years or, for companies with a global footprint, $50, he said.
A $50 million company would typically spend $5 million annually on R&D, with smaller companies spending more than 10 per cent of their worth.
New Zealand was still lagging way behind Singapore and Taiwan, but the Government had to be applauded.
"It's the first hard bit of evidence I've seen that the Government really grasped the issue of what drives an economy - R&D."
Under the tax credit plan, loss-making companies will be able to get a cash payment.
