The NZ Government’s R&D Tax Incentive aims to raise spending on research and development to 2% of GDP by 2027 in order to contribute to a stronger economy. The incentive is available from the 2019/2020 tax year for eligible businesses.
The main features of the R&D Tax Incentive include:
- a credit rate of 15%.
- a $120 million cap on eligible expenditure.
- a minimum R&D expenditure threshold of $50,000 per year, unless the expenditure related to R&D contracted out to an Approved Research Provider.
- a definition of R&D that ensures the credit can be accessed more easily across all sectors, including the technology sector.
- the inclusion of state-owned enterprises, industry research cooperatives, levy bodies, and minority-owned subsidiaries of select Crown entities.
- a limited form of refund-ability is in place for the first year of the scheme that will mirror the R&D tax-loss cash-out scheme run by Inland Revenue. A more comprehensive policy will be in place for the second year of the scheme.
Eligible businesses should be recording R&D expenditure now, in order to file at the end of the tax year.
Find out if you are eligible
Inland Revenue has developed an online tool to help you determine if your organisation and activity may be eligible for the research & development tax incentive.
On the website you’ll also find FAQs and further guidance - R&D Tax Incentive Eligibility Tool.
For more information on the 15% tax credit for innovation in your business, talk to us.