Updated digital technology guidelines released
An updated version of the Digital Technology Sector guidelines is now available.
The guidelines aim to give businesses in the digital technology sector:
- an understanding of the types of R&D performed in the sector that could qualify for the RDTI
- insights into the type of technical information required in an RDTI application
- practical examples of sector-specific General Approval applications.
The latest guidelines include a new example, involving a project aimed at developing a computer vision system to assist with wheat growing.
The technological challenge at the core of this project is to develop a system that can identify the flowering stages of wheat heads well enough to enable optimal application of fungicide to the wheat plants.
This latest example complements the existing examples in the guidelines, which include projects aimed at developing:
- a security system on a building site, featuring AI facial recognition, a cloud-based server and cameras
- a legal search platform for The Building Code, featuring a semantic search engine that can identify relevant legal passages using a mixed semantic model (rule-based Machine Learning/Natural Language Processing) significantly better than random.
Together, these examples aim to ‘bring to life’ the legislative-based RDTI eligibility criteria - in a way that enables digital technology sector businesses to see if and how their R&D could fit the criteria.
If you’d like to discuss whether your particular project may be eligible for the RDTI, Callaghan Innovation has RDTI Engagement Specialists who are ready to help.
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.
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.
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.
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.