Applying to have the limit on internal software development expenditure increased

Can I have my limit on internal software development expenditure increased?

An annual maximum of $3 million of internal software development expenditure or depreciation is eligible for the R&D tax credit.

The Minister of Finance may increase this expenditure limit if the R&D is considered to be "in the national interest". The Minister must be satisfied that:

• the internal software development will be exploited mainly for the benefit of the New Zealand economy
• New Zealand will derive a substantial net benefit from the intended completion of the internal software development, and
• the claimant has a commitment to retain the value of their business in New Zealand.

Where the Minister of Finance has increased the limit on your internal software development expenditure, all references to $3 million in this information should be read as references to your new limit.

How do I have the limit on expenditure increased?

Claimants will need to apply to the Minister of Finance, setting out:

• details of the R&D activity, and
• how the R&D activity meets the three criteria above.

You can apply to the Minister of Finance for an increase in this limit before the R&D activity begins.

All other eligibility requirements for the tax credit also need to be met.

Find out more about the process for applying for an increase to your limit on expenditure.

If you need help you can contact us for more information.

Conditions

To increase the expenditure limit, specific conditions that the applicant must meet may be included.

Find out more

• Work out if you are affected by the limit on software development expenditure
• About the limits on internal software development expenditure
• Requirement for developers to group themselves with other developers under the same control
• Calculating the limit on expenditure if you are not part of a group
• Allocating the limit across members of a group

Date published: 03 Apr 2009

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