The R&D tax credit has been repealed, effective from the 2009-10 income year. It is still available for qualifying expenditure on R&D activities carried out in the 2008-09 income year. Find out more about the R&D tax credit repeal >
Tax agents: To file a detailed statement on behalf of a client, you must upgrade your online services user ID to access your client's detailed statement. For help, ask the online services support person or administrator in your office, or contact the R&D tax credit team.
Receiving your tax credit
How the R&D tax credit is applied
The R&D tax credit is first used to satisfy the income tax liability, if any, for the year the credit relates to.
Any credit remaining will be applied to cover any other liabilities in the following order.
- an income tax liability for a previous tax year
- a current income tax liability for a future tax year
- a current provisional tax liability for a future tax year
- other amounts payable under Inland Revenue Acts.
Any remaining credit is firstly available for transfer then may be refunded.
Note
Research and development tax credits are excluded income.
New Zealand legislation
Income Tax Act 2007
- LH 2(6)
Reduction of provisional tax payments
The R&D tax credit is subtracted in calculating the residual income tax figure of a claimant.
Claimants may choose to factor their tax credit into their provisional tax calculations for the year the credit is being claimed.
For example, if you have estimated you are entitled to a $60,000 tax credit in 2008-09, you may reduce your provisional tax payments in that year in anticipation of receiving the credit.
If provisional tax is estimated, the reduction will be immediate. If you use the uplift or standard method for calculating provisional tax, the reduction will be delayed.
Claimants will be liable for use-of-money interest if provisional tax is underpaid because the R&D tax credit claim is reduced or not allowed.
Also, claimants who receive R&D tax credits in the 2008-09 year should consider the provisional tax implications of the regime's repeal, particularly if they are applying the standard 5% uplift to calculate their liability. To correct for this viriation you may need to estimate your provisional tax for the following year.
Imputation
Companies and Maori authorities receiving R&D tax credits receive corresponding credits to imputation credit accounts, or Maori authority credit accounts. The imputation credit is equal to the amount of the R&D tax credit, and arises on the date that the return is received.
A refund of R&D tax credit will lead to a debit. The debit is equal to the amount of the refund, and is applied on the date the refund is paid.
In net terms, companies effectively receive an imputation credit for the amount of income tax liability cleared by the tax credit.
Example - receiving imputation credits
For the 2008-09 income year, company A has assessable income of $200,000 and allowable deductions of $170,000, $100,000 of which is eligible expenditure for the tax credit. Company A claims an R&D tax credit of $15,000 on R&D expenditure.
| Assessable income | $200,000 |
| Less deductions | $170,000 |
| Net income | $30,000 |
| Tax liability | $9,000 |
| Less R&D tax credit | $15,000 |
| Tax to pay | $0 |
| Surplus credit | $6,000 |
Addendum
| Credit to imputation credit account | $15,000 (on the date that the return is received) |
| Debit to imputation credit account | $6,000 (on the date that the refund is paid) |
Recovery of overpayments
See Penalties and use-of-money interest for information about recovery of overpayments.
New Zealand legislation
Income Tax Act 2007
- OB 4(3)(eb), OB 7C
- OK 2(3)(cb), OK 4B
- OP 5(2)(bb), OP 7(3)(fb), OP 11B
Find out more
- Get ready to file your detailed statement
- File your detailed statement online
- What you'll need to complete your detailed statement
- How the claim process works
Date published: 02 Nov 2009
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