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Inland Revenue

Tax Policy

PUBLISHED 8 May 2019

R&D tax bill enacted

The Taxation (Research and Development Tax Credits) Act 2019 received Royal assent yesterday.

The legislation introduces a 15% research and development tax credit, and sets out the eligibility criteria and conditions that need to be met to receive it.

For more information see the Minister of Research, Science and Innovations’s media statement and the new Act.

Hon Dr Megan Woods
Minister of Research, Science and Innovation

Media statement

2 May 2019

R&D tax incentive passes third reading

The Taxation (Research and Development Tax Credits) Bill passed its third reading tonight meaning that up to ten times as many business will receive support to perform research and development work, says Research Minister Megan Woods.

After extensive consultation with business leaders the key features of the incentive were announced. These included a 15 per cent credit rate, a $120 million cap on eligible expenditure, and a minimum expenditure threshold of $50,000 per year.

“The incentive will support businesses of all sizes to undertake R&D. This will help New Zealand to move towards having a more sustainable, productive and inclusive economy.

“Officials estimate that 2,000 to 3,000 businesses will be able to benefit from the new R&D tax incentive, compared to the current 300 businesses receiving Growth Grants.

“The R&D Tax Incentive is one part of a wider package of government support for New Zealand’s innovation system and this new legislation represents a big step towards the Government’s goal of raising New Zealand’s total R&D spending to of 2% of GDP by 2027.

Revenue Minister Stuart Nash says the changes provide the kind of support that business has been asking for.

“We want businesses to feel supported when they are ready to take risks with research and development.

“Supporting companies with R&D means we are supporting progressive thinking and helping to build a dynamic and innovative economy.

“At the same time, we have built in safeguards that mean companies have to meet transparent criteria to be eligible for the R&D credits.

Further work is already underway to support all stages of business, including start-ups, to ensure they can access the R&D Tax Incentive going forward. For example, for year one of the incentive, there is limited refundability available for smaller businesses with in tax loss. The Government has committed to having a decision in place for year two of the scheme.

Minister Woods encourages businesses that are doing R&D to find out whether they are eligible, and ensure they are recording expenditure and ready to file at the end of the tax year.