This week the government released details on the R&D incentive package promised in the election and announced in this year’s budget.
Key features include:
- a credit rate of 15%;
- a $120 million cap on eligible expenditure;
- a minimum R&D spending threshold of $50,000 per year; and
- a limited form of refund in its first year that mirrors Inland Revenue's tax-loss cash out scheme (to be replaced by a more comprehensive approach in the scheme's second year).
A Bill is planned for introduction into Parliament later this month or in early November.
The package is more generous than what was billed in the Budget increasing the tax credit to 15% rather than 12.5%, and an eligibility threshold of $50,000 R&D spend rather than $100,000. Consultation on the proposed package called for more to motivate small businesses in the R&D game, and so Labour has answered.
Minister Megan Woods maintains that these changes will not break the policy’s billion-dollar budget, advising that they are still basing their numbers on 2,000 firms taking up the incentive.
Good news for R&D businesses. Hopefully the compliance costs around claiming the tax credit will not be overly complex and onerous, making claiming worthwhile this time.