The transition support payment is available to help former Growth Grant customers maintain their investment in research and development (R&D) while they move to the R&D Tax Incentive (RDTI).
For businesses that need it, this transition support payment will bring the total amount of R&D support to a similar level as their Growth Grant, so long as they maintain a similar level of R&D.
Former Growth Grant customers must enrol for the RDTI and participate in the RDTI application process before they can apply for the transition support payment.
The transition support payment is not intended to support businesses beyond the 2021/2022 financial year.
The RDTI is now the Government's main way of supporting business investment in research and development (R&D), following the end of the Growth Grant scheme on 31 March 2021.
There are key differences between the RDTI tax credit and the former Growth Grant scheme. Some activities that previously qualified as R&D for the Growth Grant may not qualify as eligible R&D under the RDTI. As the eligibility criteria differs between the two schemes, some Growth Grant recipients are uncertain about the level of funding they will receive through the RDTI. The Government has recognised this, and has introduced the transition support payment to help these businesses maintain their investment in R&D while they become familiar with the RDTI’s eligibility requirements and the process for applying.
Your Callaghan Innovation contact person can help you to understand the RDTI eligibility requirements as they apply to your business’s R&D activities. It is important to note that the RDTI continues to be refined to support more R&D-performing businesses. In March 2021, the interpretation of what constitutes 'core R&D activity' under the RDTI was broadened. While the eligibility of specific R&D varies from case to case, under this refreshed RDTI Eligibility Guidance more development-type activity, such as product development or software R&D, may now be eligible for the RDTI. Your Callaghan Innovation contact can discuss these guidance updates with you, to ensure you include all R&D activities that may be eligible within your RDTI application.
There are three main eligibility criteria for the transition support payment. Businesses must have:
If a business exited their Growth Grant and moved to the RDTI at the start of the 2019/20 income year, they may be eligible to claim the transition support payment for all three of the income years since their Growth Grant ended (i.e. for the 2019/2020, 2020/2021 and 2021/2022 income years). However, there are only a few businesses eligible for all three years. Most former Growth Grant recipients will only be eligible for the 2021/2022 income year.
For corporate groups with multiple companies that have previously claimed the Growth Grant, only those companies that have participated in the RDTI are eligible for the transition support payment. Inland Revenue's ‘R&D Tax Incentive: Transition Support Payment’ letter will include details of each business's RDTI eligible R&D expenditure.
A business cannot claim the transition support payment if they received a Project Grant in the relevant income year.
However, a small selection of Growth Grant customers were party to Collaborative Project Grants, a special purpose grant allowing an established R&D performer to partner with a less established R&D-performing business.
Customers who were party to a Collaborative Project Grant are eligible for the transition support payment (assuming they meet all other eligibility criteria), however, the Collaborative Project Grant expenditure must be excluded when determining Growth Grant Eligible R&D Expenditure under the transition support payment.