Important:
- To claim the R&D tax credit, you must submit a detailed statement online.
- In most instances, the last date for submitting a detailed statement was April 30 2010. Find out more
Excluded organisations
Ineligible businesses
Businesses that only provide R&D services, rather than carry out R&D on their own behalf are not eligible to claim (or are excluded from claiming) the credit, with the exception of industry research co-operatives (IRCs).
The following businesses are not eligible for the tax credit:
- Crown research institutes (CRIs)
- Crown entities
- tertiary institutions
- district health boards (DHBs)
- the associates of any of the above
- entities controlled by one or more of the above.
R&D done in partnership with the above entities is not eligible.
Control by CRIs, Crown entities, tertiary institutions and DHBs or their associates means either majority ownership or effective control.
New Zealand legislation
Income Tax Act 2007
- LH 1
Example - ownership by an ineligible business
Company A is 25% owned by a CRI, and 26% owned by a wholly owned subsidiary of a university.
Company A is not eligible under the legislation because a CRI and a university control it.
Company A would be eligible if it was 49% owned by a CRI but a private company held a majority shareholding with control.
Note: Examples are simplified. You should check the detailed R&D information and/or consult your professional advisor.
Association with ineligible business
Associates of CRIs, Crown entities, tertiary institutions and DHBs are not eligible for the tax credit.
The associated person rules used are the 1988 version provisions, with the exception of the tripartite test. This is dealt with in subpart YB of the Income Tax Act 2007. Under these provisions, association is assessed through various tests, such as:
- shareholding
- voting or other control tests
- associating partners with partnerships
- by relationships between parties
- by status of position, for example:
- trustees of a trust and/or settler, or
- where parties habitually act in concert.
New Zealand legislation
Income Tax Act 2007
- LH 1(2)
- YB 1-4, 7, 9-11, 13-18, 20, 21
Find out more
Date published: 02 Nov 2009
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