Are you eligible for the R&D Tax Incentive?

Businesses involved in research and development (R&D) projects can claim a 15% tax credit for the 2019-20 income year.

 

Enrolling for the R&D Tax Incentive can be done through your myIR account under “R&D Tax Incentive enrolment”. After enrolling, you will be able to complete the forms required to claim the tax credit.

 

To be eligible for the new R&D Tax incentive, the following requirements must be met:

 

A core R&D activity must be intended to create new knowledge, or improved processes, services or goods.

The R&D is trying to resolve a scientific or technological uncertainty, where experts in the area do not know the answers or possibilities.

A minimum of $50,000 is spent on R&D. However, to ensure that even small businesses can qualify for the R&D tax credit, there is no minimum spend if the business uses an approved research provider. A list of approved research providers can be found on the Inland Revenue website.

• A systematic approach is used to undertake R&D. This involves a methodical approach that is planned, structured and documented, which could involve prototyping, experimentation or analysis that tests and evaluates possible solutions.

The activities being undertaken in R&D are predominantly taking place in New Zealand. Overseas expenditure is limited to 10% of your total R&D expenditure.

You own the results of the undertaken R&D or are able to use the results at no extra cost.

 

Starting from the 2020-21 income year, a new approval process will be introduced. This will make it easier for businesses to understand whether or not they are eligible for the R&D Tax Incentive.

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