HOW DOES THE RDTI WORK?

Find out the latest RDTI news and updates here. You can also subscribe to our newsletter to stay up to date.

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November 2022

In-year payments for R&D Tax Incentive coming soon

Businesses performing eligible research and development will soon be able to access more frequent and faster payments of the Research and Development Tax Incentive, with the introduction of in-year payments in early 2023.

The Research and Development Tax incentive provides a 15 per cent credit to businesses performing eligible research and development activities. Since it was implemented in 2019, the scheme has supported over $1 billion in research and development activity in Aotearoa New Zealand.

When the in-year payment scheme is introduced, businesses will be eligible for in-year payments if they have submitted their applications and their anticipated tax credit isn’t offset by provisional tax payments. After the application is approved, businesses will receive payments during the year that they spend money on eligible research and development activity.

Tax Management New Zealand will deliver the in-year payments scheme with further details about how the scheme will work and its start date will be available later this year.

The in-year payments will be paid to businesses as an interest-free loan, repayable when the corresponding Research and Development Tax Incentive credit is available.

In the meantime, businesses are encouraged to apply for general approval on their research and development activities so they’re in a position to qualify for in-year payments when the scheme goes live.

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November 2022

COVID-19 related due date extension

Inland Revenue has announced an extension to the due date for submitting a General Approval application for the 2021/22 income year, if:

  • your business has a 30 September 2022 end of income year, and
  • the impacts of COVID-19 have resulted in you not receiving, prior to 1 August 2022, information from Inland Revenue or Callaghan Innovation that is reasonably necessary to efficiently make an application.

In these circumstances, the due date for submitting the GA application has been extended from 7 November 2022 to 7 February 2023.

This extension has been made in accordance with the COVID-19 Variation issued 3 November 2022.

Note: You can choose not to apply the variation to your circumstances. You can make that decision by taking a tax position, such as in a tax return, or by telling Inland Revenue. If you’ve already complied with the existing legislation in taking a tax position, Inland Revenue will consider that you have not chosen to apply the variation.

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October 2022

New application deadlines for Transition Support Payment

Application deadlines for the Transition Support Payment have been extended.

The new deadlines are:

  • 30 June 2023 for the 2019/20 income year
  • 30 June 2023 for the 2020/21 income year
  • 24 April 2024* for the 2021/22 income year

* This date may be extended depending on processing times 

What is the Transition Support Payment?
The Transition Support Payment is designed to help former Growth Grant recipients maintain investment in R&D while moving to the Research & Development Tax Incentive (RDTI).

It can bring total R&D support to a similar level as the Growth Grant, provided a similar level of R&D is maintained.

How to apply for the Transition Support Payment
Applications can be made via Callaghan Innovation’s online IMS portal. Depending on your situation, you may be eligible for payment:

  • for some or all of the 2019/20, 2020/21 and 2021/22 income years
  • whether or not your RDTI application is successful.  

When you log into IMS, it will automatically identify which income year/s you are eligible for, and give you access to the relevant application form/s, as they become available.

Note that before applying, you must have received your “R&D Tax Incentive: Transition Support Payment” letter from Inland Revenue. This will be sent to you:

  • after your Supplementary Return has been finalised, if your RDTI application was successful, or 
  • after you receive your RDTI application decision, if your application was declined.

Clarifying the “good faith RDTI attempt”
When you apply for the Transition Support Payment, you are asked to provide a Directors’ Attestation that:

  • you have accurately assessed your Growth Grant eligible R&D expenditure, and 
  • made a good faith attempt to participate in the RDTI.

“Good faith RDTI attempt” means you have included on your RDTI application all R&D activities that you reasonably consider to be eligible for the RDTI. Any eligible activities omitted from your RDTI application, therefore, cannot be included in your Growth Grant R&D expenditure calculation. If this affects your intention to apply for the transition support payment, please contact us at RDTIHelp@callaghaninnovation.govt.nz.

Accounting treatment
The accounting treatment applied to expenditure used to calculate the Transition Support Payment must be the same as that applied to expenditure claimed under the RDTI.

For example, if you have capitalised certain costs under the RDTI in a given financial year, they cannot be included in your calculation of your notional Growth Grant R&D expenditure for that financial year.

Grouping rules
If you previously claimed the Growth Grant for a group of companies, only those companies in the group that also claimed the RDTI are eligible for the Transition Support Payment.  

Questions in the Transition Support Payment application will help you identify whether any companies need to be excluded - see “How to apply” above for details on how to access the application form.

Updated Directors’ Attestation
Please note that the Directors’ Attestation form was updated in March 2022 to include reference to the good faith attempt and grouping rules outlined above. 

You can view an example of the updated form here.

We’re here to help
If you have any questions about the transition support payment, we’re here to help! 

Please contact us at RDTIHelp@callaghaninnovation.govt.nz and we will get back to you promptly.

You can also check out the relevant pages on the Other R&D support section of the RDTI website.