The new R&D Tax Incentive allows businesses to claim back 15% of R&D expenses, for IP generating R&D performed in NZ and up to 43% when combined with other incentives.
IRD conditions apply
If you’re planning on, or currently undertaking an R&D project, it’s critical you’re able to quickly understand the conditions of this opportunity. We’ve summarised everything you need to understand the incentive, reap the benefits and gain an edge on your competitors.
Blender has been recognised by the IRD as an Approved Research Provider (ARP). What this means is that our methodology is in line with the incentive requirements for R&D activity. Our status also removes the standard minimum spend of $50,000, so our clients can claim back 15% on all eligible R&D expenditure.
01.
WHO CAN APPLY FOR THE INCENTIVE?
If you are involved in developing new digital or physical products in NZ, then you’ll likely be eligible for this tax incentive. It requires you to have some working capital, but beyond that there are very simple requirements.
These are some of the eligible entities:
- Private and public entities
- Businesses developing new products or services for market
- Businesses engaged in researching new materials and processes
- Entrepreneurs
- Tech Developers
02.
HOW THE R&D INCENTIVE CAN BENEFIT YOU
This incentive is a subsidy that supports those investing in R&D activities over the 2019/20 financial year, with multi-year approval available for up to three year periods. It allows a business or entity to accrue a tax credit that can be used to offset the cost of R&D.
If you’re an eligible entity you’ll benefit from the following:
- More R&D for the same budget
- Eligible loss making entities can stack their income loss refund (28%) with the tax credit (15%), totalling 43c in the dollar
- A new broader definition of R&D that focuses on activity
- Previous incentives used the expenditure focused model from accounting. An activity based definition means it can cover more of the Research and Exploratory stages of development that are key to Innovation
03.
YOU CAN SPEND LESS TIME READING THE IRD’S 122 PAGE BREAKDOWN OF THE INCENTIVE
You’re busy, you’ve got R&D activities to carry out and may find it tough to sift through the entire document. Instead use our flow diagram below to gain an understanding of the scheme. We recommend talking to your accountant for the finer details that apply to you, and to your Blender representative for advice on the eligibility of specific projects.
04.
YOU DON’T HAVE TO DO THE PAPERWORK
Utilising the incentive could give you administration headaches in record keeping, process documentation and financial expenditure forecasting that you just don’t have time for, working with Blender is a sure way to reduce this overhead.
We’ve been creating, refining and commercialising new IP for NZ based companies for 13 years and counting. We’ve created a rigorous design process and strict record keeping structure that makes it easy for our clients to document their R&D, cut down administrative costs and reduce overall frustration.
Our process follows a high level plan that is covered by the R&D incentive and stimulates the generation of new IP:
- We use Design Discovery to define the key opportunities for creating a new and exciting product
- Concept Exploration casts the net wide to consider all the available options for innovation
- We refine using Engineering & Design to solve the technical unknowns through the use of CAD and other advanced 3D tools
- Prototyping is used throughout the process to validate the idea by testing all, or some aspects of the design in situ, with end users
- Some Production Engineering can be included within the eligible expenditure, if there are still elements of resolving scientific or technical uncertainty
05.
ONE LAST POINT BEFORE YOU START
Only one entity can claim on generated IP to avoid a double claim on the same work. This will be most relevant to those in a joint venture. In Blender’s case we have a transparent set of terms concerning IP ownership, and this helps to ensure a clear pathway for claims to be lodged.
OK now you can start! The initiative is live, and you can access the relevant information including an eligibility test in the links below. We look forward to working with you and growing innovation together in New Zealand.
