Government may decide to alter tax loss rules

By SIMON COLLINS science reporter

The Government has agreed to look at allowing companies to carry forward tax losses when their ownership changes.

Science Minister Pete Hodgson told an Auckland biotechnology network breakfast yesterday that carrying forward tax losses was on the table for consideration.

He also confirmed that ministers were rethinking taxation of venture capital funds to give foreign investors some assurance about whether they would have to pay capital gains tax when they sold out of their investments.

Both issues are being considered by a biotechnology taskforce co-chaired by Hodgson and Biotenz chairman Bill Falconer.

The Government's growth and innovation package in February picked biotech as one of New Zealand's three top hopes, along with information and communications technology and creative industries, for lifting living standards up to the Western average.

Hodgson said he had the final draft of a biotechnology strategy in his bag ready to go to a Cabinet committee today. The strategy would be released "within a month".

Legislation would be introduced in February or March to implement a streamlined approval process for "low-risk" genetic modification, as recommended by last year's Royal Commission on GM.

"We are looking at intellectual property laws - not just patent legislation but plant varieties stuff. We are out of date. We need to catch up."

He said there would be no tax breaks just for biotech, but the Government would consider "small, useful, important things" such as allowing losses to be carried forward.

At present, companies are allowed to pass forward tax losses only as long as at least 49 per cent of their ownership remains unchanged.

The head of the Institute of Chartered Accountants' tax committee, Chris Abbiss, said the law hit many start-up companies, where new shareholders bought in as a company expanded.