An approved research provider is someone who provides R&D services under contract to other businesses in New Zealand.
When you might choose to engage an approved research provider
If you are carrying out your own R&D activities, you cannot claim the tax incentive unless you have at least $50,000 of eligible expenditure in your income tax year.
If you have less than $50,000 of eligible R&D expenditure, you may be able to claim the R&D tax incentive if your R&D is performed by an approved research provider on your behalf. This exception helps make the R&D tax credit accessible to businesses of all sizes.
Eligibility of claimants who use approved research providers
To claim the R&D tax credit with respect to R&D activities performed by approved research providers on your behalf you must satisfy the eligible entity criteria.
Not all activities you have outsourced to an approved research provider will necessarily be eligible for the tax credit. The same activity exclusions apply whether you contract out your R&D activities or perform them yourself.
You can only claim for the portion of your payment to an approved research provider which would have been eligible R&D expenditure if you had incurred it directly.
How to become an approved research provider
All research providers are eligible to apply to become an approved research provider. This includes sole traders, partnerships, companies, independent research organisations, trusts, charities as well as public bodies such as Crown Research Institutes, district health boards, tertiary education organisations and their associates.
To become an approved research provider, you must:
- be capable of performing R&D activities on behalf of other people
- have facilities to perform R&D activities in New Zealand
- be available to perform R&D activities on behalf of third parties
- perform R&D activities for other people for market value consideration.