New Export Assistance
(Posted April 2008.)
R& D tax credits.
This tax credit will encourage businesses that are not investing in R&D to do so, and those that are, to do more. What the R&D tax credit means for business owners is that from the start of the 2008-2009 income year, businesses can apply for 15 cents back on every dollar spent on eligible R&D activity. The system is simple. It applies to all qualifying R&D and not just new and additional expenditure. Some expenditure doesn’t qualify, for example where the R&D is already co-funded by the government, typically at 50% of total expenditure. Because it is a tax credit it also applies to those who don’t pay tax, typically because they are loss making start-ups. Such companies will in effect receive a cheque from Inland Revenue.
The R&D tax credit also complements other government support available to firms to enhance their R&D activity. The Foundation for Research, Science and Technology offers a range of Technology New Zealand grants that help a range of businesses, from start-ups to mature companies. And for firms who have a product ready for market, New Zealand Trade and Enterprise may be able to offer assistance with marketing and branding, for example, to help get your product or service offshore. This audience will be well familiar with that.
The Working Capital Guarantee.
Is a guarantee from the government to the bank, it will enable eligible exporters to secure up to 20% extra working capital facilities and will free up working capital to meet large or unexpected orders. A firm may have a profitable but unexpected export order but lack the tangible collateral for the bank to extend credit. The working capital guarantee from the government provides the firm access to the capital for up to 12 months. Minimal additional documentation is required and the product will be offered in partnership with banks.
The Contract Bonding.
This product works in a similar way to the US Surety Bonding. It extends similar benefits for firms seeking bond security for contracts in countries outside the US. This facility is available when New Zealand banks or bond providers can’t provide a bond. This can occur when the exporter lacks sufficient collateral and the working capital required to supply the order, or when there are jurisdiction issues such as when a bond guarantee from a New Zealand bank or bond provider is not eligible. This new bonding product enables the Export Credit Office to offer a 100% indemnity to banks or bond providers to issue bonds on the exporter’s behalf. This frees up working capital for the exporter.
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