R&D tax credit rules changes, which came into effect at the start of the 2016 income year, can help business cashflow.
The Research & Development Tax Credit regime allows a “cash out” of an organisation’s R&D tax losses. The cashed-out amount must be repaid from future income.
In general, a taxpayer will be eligible for the cash out if they:
- Are a New Zealand tax resident company
- In a tax loss position
- Maintain continuing ownership of intellectual property
- Have a “wage intensity” of at least 20 percent (calculated as total R&D labour expenditure ÷ total labour expenditure).
The “cash-out” is subject to maximum caps and will be clawed back in certain circumstances such as a substantial shareholding change or the disposal of Research & Development assets. Only expenditure that doesn’t meet the threshold to be capitalised as an intangible asset qualifies for the tax credit. If you think you may be eligible please contact us.