The Government has committed to raising New Zealand’s research and development (R&D) expenditure to 2% of GDP over 10 years.
To reach this target more businesses will need to increase their expenditure on R&D. This will be supported through an R&D tax incentive.
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. A more comprehensive policy will be in place for the second year of the scheme
- 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.
The 15% tax credit will be available from the beginning of a business’s 2019/20 income year.