What is the R&D tax incentive?
The Ministry of Business, Innovation & Employment has announced that businesses performing eligible research & development can access faster and more frequent payments of the R&D tax incentive this year.
The scheme provides a 15% tax credit to businesses conducting ‘eligible’ R&D activities and has supported more than $1 billion in research costs since its inception in 2019.
A new feature has been introduced into the scheme whereby rather than receiving the credit after your income tax return has been filed and your application has been finalised by Inland Revenue, regular cash payments can be received starting in the same year as you conduct your R&D.
- Businesses are eligible for the new in-year payments if they have submitted applications and their anticipated tax credit isn’t offset by provisional tax payments.
- Once applications are approved, businesses will receive payments during the tax year in which they made R&D investments.
- In-year payments will be paid as an interest-free loan, repayable when the R&D tax credit is available.
- Tax Management New Zealand will deliver the in-year payments scheme, and more details on the programme can be found on MBIE’s website.
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