Are you conducting research and development on home turf? You could be eligible for a tax credit of 15% on eligible R&D expenditure. The Government have introduced legislation bringing in a new R&D tax credit effective from the 2019/20 income tax year (1 April 2019 for most taxpayers) to encourage more Kiwi businesses to invest in new or improved processes, services or goods. It means innovative companies can receive a tax credit and maybe then have a bit of extra cash to help grow their business when they need it most.
So, who can get the tax credit, and who can’t?
You may be eligible if your R&D activity:
- Has a goal to create new knowledge, or new or improved processes, services or goods; and
- Uses a systematic approach to resolve scientific or technological uncertainty, and
- Is new on a worldwide basis, not just new to your business or New Zealand, and
- You spend more than $50,000 on R&D
You’re not eligible if:
- The knowledge required to resolve the scientific or technological uncertainty is not publicly available and cannot be worked out by a competent professional in that field with a systematic process
- You performed the R&D on contract for other parties, received a Callaghan Growth Grant in the same tax year, are associated with/controlled by a Crown Research Institute, DHB, or tertiary education organisation.
- Your research was conducted in the social sciences, humanities, arts or investigating the market for your product or service
- Someone has already successfully done what you are trying to do. You must be able to show that you searched for an existing solution before you started your R&D.
Could this apply to you?
Make sure you have clear, accurate information about the project’s content, scope and costs involved (including appropriate apportionment of overheads). You can’t create the documentation at the end of tax year. It needs to be done as the R&D is progressed. Clearly record your R&D expenditure as it is incurred so it’s easily identifiable. The documentation requirements are detailed so it is important to do this correctly.
Unsure if you’re eligible? Call us to talk about your R&D project.