New Zealand

Details

  • Service: Tax
  • Type: Business and industry issue
  • Date: 2/08/2013

Contact us

Paul McPadden

Paul McPadden

National Managing Partner  - Private Enterprise 

+64 9 367 5919


Gwenan Riley

Gwenan Riley

Partner - Tax

+64 4 816 4755

Tax

Our tax advisory team has the skills and commitment to help you to be competitive and compliant in all areas of business tax.

Taxmail - Refund of R&D tax losses 

Issue 1 - August 2013

 

In the Budget, earlier this year, Government proposed allowing tax losses arising from Research and Development ("R&D") expenditure to be refunded ("cashed out") up to a certain limit. The proposal was aimed at R&D intensive start-ups.  

 

Taxmail discusses the detailed design of the proposal and its implications for business.

Download Now
PDF files require Adobe Reader to view

An Officials’ issues paper has now been released with further detail on the proposal, including:

 

  • The definition of “R&D intensive start-up”: it is proposed that this will be companies that spend at least 20% of their salary and wage bill on qualifying R&D activity.

 

  •  The definition of qualifying R&D expenditure: this will broadly follow the existing “research” and “development” definitions used for tax purposes (with certain specific carve-outs).

 

  • The amount to be “cashed out”: this will be limited to the lesser of 1.5 x R&D salary costs, total tax losses and qualifying R&D spend, up to a maximum refund of $140,000 initially.

 

It is worth noting that the proposal is not a replacement for the 15% R&D tax credit which was repealed with effect from 2010. That was clearly intended to be a tax incentive.  

 

The R&D tax loss refund, in contrast, is aimed at helping with early stage cash-flow (it will claw back the tax benefit when the company makes a return on their R&D investment).  

 

There is, therefore, still the question of whether there is a role for R&D tax incentives to help New Zealand’s best and brightest firms innovate.

Tax submissions - Submissions on draft tax legislation, Government discussion documents and issues papers, & various tax interpretation statements released by the New Zealand Inland Revenue. 
Share this