The high-tech software sector is set to be a big winner from the government's $250 million injection into research and development.
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The government is putting money into two new grants, which will sit alongside the R&D tax incentive system introduced in 2018.
Ārohia the Innovation Trailblazer Grant will help with the costs of activities that do not fall within the definition of R&D, and the New to R&D Grant will support businesses that do not have established R&D capabilities, and provide an on-ramp onto the R&D tax incentive, the government said.
NZ Tech chief executive Graeme Muller welcomed the move, saying the tax incentive system moved R&D into a tax structure which had a lot of rigid rules, creating problems for non-traditional innovators like software firms.
"It used an official definition of R&D and that official was more historically facing around more tangible product R&D. It actually inadvertently cut out a lot of type of R&D that you need to do to built a strong software company.
"That system, whilst it might be good for more traditional parts of the economy like manufacturing, it actually reduced the amount R&D incentives that was available for software companies."
Muller said companies short of capital would no longer have to wait for a tax year to finish to get funds.
He said $250m from the government should drive at least $1 billion of additional R&D.
Research and Innovation Minister Megan Woods said the grants would help with the high costs and steep learning curves associated with R&D.
"I also want to provide extra encouragement to businesses that are performing innovation that is new to the world.
"Now with a combination of the R&D tax incentive, and the new grants programmes, we will have a system of support that is much more representative of the full gamut of business activity we want to stimulate."
