Updates to R&D tax incentive

The government has announced its R&D Tax Incentive package. It aims to raise New Zealand’s research and development expenditure to 2% of GDP over 10 years.

To reach its target the government needs businesses to increase their expenditure on R&D and to encourage this they will be supported through the R&D tax incentive.

The key features of the R&D tax incentive include:

• A tax credit of 15% of total eligible expenditure
• A minimum R&D expenditure threshold of $50,000 per year (unless R&D is through an approved research provider)
• A limited form of refunds for the first year of the scheme, with a full policy in place by April 2020
• A $120 million cap on eligible expenditure
• A definition of R&D that ensures accessibility across all sectors

The 15% tax credit will be available from the beginning of your 2019/20 income year.

From September 2020, an amendment to the act has allowed for the R&D expenditure to be eligible for deduction from the regular income, as opposite to the disallowance earlier as the expense was funded through a government grant. This allowance is applicable retrospectively for expenses since 01 July 2020. The allowance also extends to expenses made from the R&D loan scheme.

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