Research & Development
Research and development tax credits
New tax rules have been introduced, which provide a tax credit for New Zealand businesses that perform R&D on their own behalf, or that commission others to perform R&D for them, provided the R&D is performed predominantly in New Zealand
A maximum of $3 million of internal software development expenditure will be eligible for an R&D tax credit in any year
Amount of tax credit (section LH 4)
The amount of the tax credit is 15 percent of "eligible expenditure"
Expenditure on overseas R&D (section LH 6)
Expenditure on R&D activities carried out overseas is not eligible for the tax credit unless it is part of a project based in New Zealand, and meets the definition of overseas eligible expenditure
Definition of R&D activities (section LH 7)
Only R&D activities as defined in section LH 7 are eligible for the tax credit
Activities excluded from SIE activities (Schedule 21, Part C)
Certain activities are routinely excluded from R&D tax incentives
Eligible expenditure (Schedule 21, Part A)
Expenditure the is eligible for the credit
Ineligible expenditure (Schedule 21, Part B)
Expenditure that is ineligible
Listed research providers (section LH 15)
Section LH 15 sets out the requirements to be listed with the Commissioner as a research provider and the administrative rules for listing
R&D tax credits and imputation accounts (sections OB 4(3)(eb), OB 7C, OK 2(3)(cb), OK 4B, OP 5(2)(bb), OP 7(3)(fb) and OP 11B
In other jurisdictions, such as Australia, tax credits to companies are "clawed back" when paid out as dividends. The New Zealand credit has been designed to reduce such "clawback"
Changes to the disputes and reassessment rules
Changes to the disputes and reassessment rules
Determinations, record keeping, no exemption, use-of-money interest and penalties and refunds of surplus credits not subject to GST (sections of the Tax Administration Act 1994)
Various sections of the Tax Adminitration Act 1994 and R&D tax credits
Cap on internal-use software expenditure eligible for a credit (sections LH 9 to LH 13 and LH 17)
A maximum of $3 million of internal software development expenditure will be eligible for an R&D tax credit in any year
Date published: 20 May 2008
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