R&D Tax Incentive: Tips for getting organised

The R&D Tax Incentive is a great program for NZ businesses wishing to grow and make new important findings. The process of applying for the claim can seem overwhelming at first, but there are some general actions that can be taken to reduce any last-minute stress.

  1. Checking for Eligibility

There are 4 general criteria that your business can check early on before you get into the details. Further details for eligibility are available on the Inland Revenue website.

  • Is the entity an eligible entity?
    • This must be an entity that carries on the business in New Zealand through a fixed establishment, performing the core R&D activity within New Zealand.
  • Is the R&D activity conducted eligible for the incentive?
    • The Core Activity must be conducted systematically for the purpose of creating new knowledge/processes/services/goods and for the purpose of resolving scientific or technological uncertainty.
    • It is not eligible if the knowledge required is available to the public or if it can be deduced by a competent professional in the field.
  • Is the R&D expenditure eligible for the incentive?
    • Eligible expenditure includes salary and wages paid to employees conducting the R&D activity, depreciation on assets used for the R&D activity and expenditure/loss on acquiring goods and services for R&D use.
    • There is a cap on foreign R&D expenditure of 10% of the total spend.
    • Other exclusions apply
  • Does the business have full documentation to support the R&D activity and expenditure?
    • Contemporaneous documentation must be maintained and submitted with the claim;
    • Documentation should be in an appropriate format for the activities and expenditure claimed

2. Get organised early

  • It is advisable to engage a specialist tax advisor early in the process, Swanson Reed has technical analysts as well as specialist tax advisors who can mediate between the two aspects of the claim.

3. Get help from a reputable advisor

  • There are many steps in the claim process, including the initial registration and obtaining a general approval for the R&D activities prior to claiming the tax credit. The Inland Revenue website has information about the process in detail.
  • Conduct research to ensure you are seeking advice from a reputable advisor.

Use our helpful eligibility assessment tool here.

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