Tax break for start-ups

Tax changes to make life easier for start-up firms needing to bring in new investors but which could lose deductions for research and development spending if they do have been announced by Finance Minister Michael Cullen.

New ventures can build up deductions for R&D expenditure because they do not have enough taxable income to deduct them from.

Cullen told the Canterbury Manufacturers Association yesterday that shareholding changes could cost a company its R&D deductions.

"This is particularly a problem for companies in the technology sector where it is common for additional investors to come in after the initial development work has occurred." The measures will be in the next tax bill.