Government grants, credits and incentives

Overview

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.
 

Research and development claims process

Deloitte can assist clients with R&D claim preparation through our proven methodology including:

• initial scoping workshops to determine the potential benefit;
• review of systems suitability;
• review of technical eligibility;
• analysis of eligible expenditure;
• claim preparation, including general approval and significant performer pre-approval applications; and
• submission to Inland Revenue.

A key feature of the regime is its move to a pre-approval basis, which accelerates the deadlines for lodging key aspects of R&D tax incentive claims. It is therefore important that claims are progressed in a timely manner.

Identifying qualifying R&D activities for the R&D tax incentive can be challenging for both large and small businesses. This is due to the underlying technicalities and judgment needed to apply the definition to meet the information requirements of Inland Revenue.

Our advice can help to take the complexity out of making R&D claims and find value by looking deep into your business, using expert practitioners backed up by a technology enabled approach. This can help our clients to get more value out of the R&D tax incentive.
 

Documenting your R&D

There are certain requirements for supporting documentation to be retained to record aspects of the R&D undertaken. Whilst in many cases existing records are suitable to support a claim, early assessment of its suitability simplifies the claim process and ensures the full scope of R&D is identified. Deloitte can help clients evaluate existing systems to determine how best to utilise them to track R&D activities.
 

Transitioning from Callaghan Innovation Growth Grants

Many businesses are still receiving growth grant funding, providing critical support for R&D activities, which will be replaced by the R&D tax incentive. Deloitte can assist clients with the transition process by ensuring R&D qualifying under the tax incentive is identified and helping clients to understand the differences in cash-flow.
 

Team expertise

Deloitte combines tax technical expertise with industry experience from a range of sectors such as software, engineering and ecology & biodiversity to ensure that multiple aspects of an incentive claim are understood and considered. Our specialist R&D team has a wealth of experience from practising in New Zealand, and internationally in both the UK and Australia. Deloitte practitioners know and understand your industry, your business language, and your technology language.
 

Technology

Deloitte uses myInsight: Global Incentives (“myGi”) which is a web-based technology tool designed and maintained by Deloitte that allows the collection of data, documentation and technical eligibility assessments in an efficient and scalable way. This technology streamlines and accelerates the gathering and processing of data and information needed to make informed business decisions regarding credits and incentives claims.

Find out more about our Gi³ Technology Solution

R&D claims and Government Incentive applications often receive regulatory scrutiny. Deloitte can assist in the resolution of any such audits as well as providing support relating to information requests or reviews from government bodies.