Learn how to tap into tax benefits to fuel your innovation. 2024 deadlines for NZ’s two R&D tax credits are fast approaching, so let’s dive into what you need to know about them.
What R&D Funding is Available?
If your business isn’t yet claiming tax credits to offset your Research and Development (R&D) expenses, make 2024 the year you take the plunge. With possible cash refunds of between 15% and 43% of your R&D expenses, you don’t want to miss out.
New Zealand offers tax credits and cash refunds for your R&D activities through two separate programs:
- 15% of costs - R&D Tax Incentive (RDTI)
- 28% of costs - R&D Loss Tax Credit
How to Claim the RDTI Credits
There are 4 key steps to claim tax credits under New Zealand's RDTI:
- Identify your qualifying work
- Get your R&D Activities approved (General Approval)
- Claim R&D expenditure (at the end of each tax year)
- Regularly offset your provisional tax (if applicable)
The first step is to understand how much of your work qualifies as R&D according to the legislative definitions of R&D. There are different definitions for the RDTI and the R&D Loss Tax Credit, and important exclusions apply.
For most businesses, the next step is to seek a ‘General Approval’ for the Research and Development Tax Incentive (RDTI). This involves submitting a written description of your R&D activities, and will be assessed by specialist reviewers with engineering and science training at Callaghan Innovation.
Once you have your general approval, you can then claim 15% of all related costs under the RDTI by submitting a special Supplementary Return to the IRD alongside your normal tax return. If your business has made a loss for the tax year, you can also complete at the same time a separate R&D Loss Tax Credit application to ‘cash out’ an additional 28% of expenses.
The final step helps smooth your cashflow, by using the credits to offset your regular provisional tax payments (if applicable).
Which Years Can I Claim R&D Costs For?
Your RDTI general approval can cover ‘core’ R&D activities conducted since 1 April 2023, and cover one, two or three tax years. That means a three-year approval could stay valid for costs until 31 March 2026.
NEW! The general approval can also cover supporting R&D activities conducted one year earlier and one year later than your core R&D, making for five tax years in total (1 April 2022 – 31 March 2027).
Be careful - don’t miss the 7th of May deadline, or your dates will shift a year later. This is because only approved R&D activities can be claimed for.
2023-24 RDTI General Approval Periods
If you’re also applying for the R&D Loss Tax Credit, the deadlines above apply to costs in the 2023-24 tax year: 1 April 2023 – 31 Mar 2024. Applications are made each year.
"I’m a Big Spender. Do I still need a General Approval?"
If your business expects over $2m in R&D expenses per tax year, you can apply for ‘Criteria and Methods’ approval instead of General Approval. However, the deadline for that was 30 September 2023, so if you haven’t arranged this already, it's now only available for 2024-25 tax years and later.
In practice, because the Criteria and Methods assessments involves extra work at application time and at the end of each tax year, it's likely you'll still prefer the General Application route. Get in touch if you wish to discuss your specific situation further.
Major R&D Tax Credit Deadlines (for standard 31 March tax years)
| 7 May 2024 | Apply for RDTI General Approval |
| 6 Aug 2024* | Submit RDTI Supplementary Return |
| 6 Aug 2024* | Apply for R&D Loss Tax Credit |
*If you have a tax agent or standard extension of time, this deadline may be 30 April 2025 (for the 2023-24 tax year)
How to Get Started with RDTI?
If you want to DIY then your first step is to digest the IR1240 , and the relevant sections of the Income Tax Act 2007 and the Tax Administration Act 1994 .
Before you assess your eligibility, we recommend gaining a good understanding of the regulatory framework to avoid wasted time and non-compliance.
If wading through tax law is not your cup of tea, then reach out to one of our grant advisors today. BlueRock offers:
- high-quality advice regarding eligibility
- full-service preparation of your applications
- assistance in dealing with regulators
- accurate calculations of your R&D expenditure, and
- support with your end-of-year claims.
Your 2024 R&D credits? Sorted!
