On 3 October 2018, the Government announced the design of the research and development (R&D) tax incentive following extensive consultation with business.
The key 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
- a limited form of refunds for the first year of the scheme that will mirror the R&D tax-loss cash-out scheme run by Inland Revenue (to be replaced by a more comprehensive policy in the scheme’s second year)
- a definition of R&D that ensures the credit can be accessed more easily across all sectors, including the technology sector, and
- the inclusion of State-Owned Enterprises, industry research cooperatives, levy bodies, and minority-owned subsidiaries of select Crown entities.
The 15% tax credit will be available from the beginning of the 2019/20 income year.
A Bill is planned for introduction into Parliament later in October or in early November 2018. Visit the Ministry of Business, Innovation and Employment’s website for further information.