The New Zealand Government has a target of raising the total amount of R&D performed in New Zealand to 2% of gross domestic product by 2028. This has led to a new R&D tax incentive that offers a 15% tax credit for qualifying expenditure on eligible R&D activities, to help lower the cost to businesses in performing R&D.
A core R&D activity is defined as an activity that:
- Has a purpose of creating new knowledge or new or improved products/processes/services, and
- Has the intent of resolving scientific or technological uncertainty, and
- Is conducted in a systematic way.
This definition is designed to allow companies from all industries, ranging from agritech, to software, manufacturing, food and drink and electronics to benefit from the regime if the above definition is met.
A key favourable feature of the regime is the ability to obtain a cash pay-out of the benefit if the claimant is in a tax loss position in many cases. This includes options to receive the cash benefit during the year.