R&D tax incentive: What you need to know now — business.govt.nz

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R&D tax incentive: What you need to know now

Money your business spends on R&D may be eligible for a tax credit from 1 April 2019. More guidance is coming, but here’s what you need to know now.

What: To encourage businesses to spend more on research and development, a new R&D tax incentive has been introduced in New Zealand. Guidance as to what sort of R&D will be eligible will be released in coming months.

The R&D tax incentive includes a credit rate of 15 percent, a $120 million cap on R&D expenditure and a minimum R&D spend threshold of $50,000 per year.

It is part of a wider package of government support for New Zealand’s innovation system, which includes Callaghan Innovation’s R&D grants, R&D and commercialisation services, and innovation programmes.

Who: Businesses investing in eligible R&D activity or businesses that contract out R&D to approved providers.

When: The R&D tax incentive will apply to the 2019/20 income year. For most businesses, this means R&D spend from 1 April 2019 may be eligible for the incentive. You’ll want to start recording activity and spend now and over the course of the financial year so your records are ready to file at the end of the next tax year.

What’s next: The Taxation (Research and Development Tax Credits) Act 2019 was passed into law in early May 2019. There is draft guidance available now from Inland Revenue which will be finalised in the coming weeks. More information about eligibility and how to claim the tax credit will be available in the coming months.

Why: Even though the guidance is not yet finalised, we’re telling you this now so that you can keep records of any investment in R&D that you make over the next few months that may be eligible for a credit.

Research and development tax incentive (external link) — Ministry of Business, Innovation and Employment

Research and development tax credit guidance consultation (external link) — Inland Revenue

R&D tax incentive (external link) — Callaghan Innovation

Do you have more questions about the R&D tax incentive?

Do you have more questions about the R&D tax incentive?

Contact Inland Revenue by email at R+Dincentive@ird.govt.nz.

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