Research and Development Tax Credits
The 15% R&D tax credit is intended to encourage New Zealand businesses to invest more in R&D, to innovate and develop improved products and processes. This is expected to have wider benefits for the New Zealand economy and boost productivity and international competitiveness.
Applied Support Services can assist you with:
R&D tax credit plans and reporting systems
Expenditure eligible for the tax credit includes:
• salaries and other remuneration of employees conducting R&D
• depreciation of tangible assets used in conducting R&D
• costs of staff training, recruitment, relocation and travel incurred directly as a result of R&D
• the cost of materials incorporated into prototypes
• certain overheads that relate to administration, human resources, repairs and maintenance, cleaning and security
• rates, utilities, insurance and leasing of buildings, plant and equipment
• the cost of items consumed, and the net cost of items processed or transformed, in R&D activities
• payments to an entity or person for R&D services performed on behalf of the claimant
The Inland Revenue advise that the R&D tax credit will not be available to claimants in their 2009/2010 income year.
Notice of Proposed Adjustment (NOPA)
The R&D Tax Credits can still be claimed for the 2008-2009 income tax year if you file under a Notice of Proposed Adjustment (NOPA). You must submit an NOPA to request that your income tax return be reassessed to include your claim for an R&D tax credit.
R&D Detailed Supporting Statement:
To claim your R&D tax credit you must file both an income tax return for the year the credit relates to and a detailed supporting statement. The detailed supporting statement describes the R&D activities undertaken and the expenditure incurred. The detailed supporting statement must be prepared and declared on-line and filed no later than 30 days after the due date for the income tax return.
If you or your tax agent, do not have an on-line account with the IRD you must create one. Go to the IRD's On-Line Services Registration at: http://www.ird.govt.nz/online-services/online-services-registration.html
Applied Support Services are experienced at preparing R&D tax credit claims and if you would like assistance please Contact us.
Who can get the R&D tax credit:
New Zealand businesses undertaking R&D on their own account or outsourcing R&D will be eligible. Businesses will have to incur at least $20,000 of eligible expenditure in the year a claim is made unless the R&D is outsourced to a listed research provider. Businesses will be eligible, regardless of their legal structure, if the R&D is carried out predominantly in New Zealand.
The credit will be 15 per cent of the claimant’s total eligible expenditure for the year. Non-deductible expenditure, such as GST input tax, capital expenditure on land or on non-depreciable intangible property will not be eligible. R&D credits will be paid out in cash to loss making businesses such as start-ups.
The R&D must relate to your business, or to an intended business in New Zealand and it must be carried out “on your behalf”. Records demonstrating the claimant’s control over the R&D activities will be required to show that you will:
• control the research and development activities; and
• bear the financial risk of the R&D activities; and
• effectively own the results of the research and development activity, if any.
Our Experience:
Applied Support Services has 15 years experience assisting companies plan and apply for research and development funding. For six years Applied Support Services was a Crown Agent for the Foundation for Research Science and Technology, where we planned and managed approved grants for private sector research and development (GPSRD) in Auckland and Districts.
Applied Support Services and UHY Haines Norton provide claimants with R&D tax credit briefing, scoping, planning and reporting services. UHY Haines Norton provide advice on tax matters, cost accounting, project accounting and R&D tax credit record keeping systems. network. Contact them at www.bbw.co.nz
For businesses located in Waitakere City, Waitakere Enterprise provide state of art meeting rooms and workshop facilities for firms engaging Applied Support Services and Butts, Bainbridge & Weir for R&D tax credit briefing and scoping services. Waitakere Enterprise also provide the Powerful Ideas Business Speaker Series and Enterprise Training programmes. Contact them at www.waitakereenterprise.co.nz
Applied Support Services Limited’ Research and Development Tax Credit Disclaimer
Applied Support Services Limited provides professional advice on preparing Research and Development (R&D) plans, budgets, implementation schedules and project monitoring and control. Applied Support Services Limited provides advice on establishing evidence that R&D activities meet the IRD’s criteria for systematic, investigative and experimental activities, (SIE). Applied Support Services Limited does not provide professional advice on tax or accounting matters as such. For advice on tax and accounting matters please consult with the Inland Revenue Department, an accountant or qualified financial advisor. Claimants are advised that sections of the “Annual Rates, Business Taxation, KiwiSaver, and Remedial Matters Bill” will remain in public consultation, or are still subject to the decision of the Commissioner, and may remain so until 2010. Dated January 2008.
This page was last updated on 13th May 2010
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