Research and development makes unique demands of a company – and the individuals who take it on. Often people involved in R&D are driven by passion – there’s a problem to be solved or a useful invention that has to see the light of day. The work can easily become all-consuming. The long hours and late nights can take a toll.
However, a major challenge many innovators face finding the funding to keep going. The process of taking a product from imagination to market is not always linear or predictable – which makes it hard to budget for. At the same time conducting research and developing a great idea generally requires a significant financial investment.
Tax Credit available for R&D Companies
Last year the Government introduced a new Research and Development (R&D) Loss Tax Credit to help give innovative companies access to some of their tax losses sooner.
This tax credit enables eligible companies to ‘cash out’ (claim and be refunded) up to 28% of R&D-related tax losses, so they’ll have money to grow their businesses when they need it most.
Short-term, this will help improve the cash flow of companies involved in R&D. In the past, these companies would have carried their tax losses forward offset against future income.
Long-term, this change will help encourage innovation. Finding innovative solutions to everyday problems is a cornerstone of our culture. While we might not ‘fix it with no.8 fencing wire’ any more, our can-do approach and self-reliant attitude are still hallmarks of the Kiwi way of life. New knowledge gained by companies involved in R&D can result in improved materials, products or devices – all of which could help give our country a competitive edge and benefit the economy
Check if you’re eligible and apply online
You can start the process today. Find out if your company is eligible and apply at www.ird.govt.nz/rd-credit(link is external)
If you think your company might be eligible, don’t delay. To receive this credit, you must submit your application to Inland Revenue before your income tax filing due date for the 2016/17 financial year.