New Zealand’s Inland Revenue has brought forward by one year the application date of broader refundability for the R&D tax credit. The move is intended to help businesses retain their R&D capability during the COVID-19 outbreak, the government said.
The government noted that refundability rules have been developed and will apply from year 2 of the regime (the 2020–21 income year). However, these rules will not apply in time for businesses struggling with the effects of COVID-19.
“Bringing the application date of the year 2 refundability rules forward to year 1 (2019– 20 income year) should provide more businesses with access to R&D tax credit refunds sooner,” the New Zealand government said. “This will provide businesses performing R&D with cash now, when they need it the most, and will encourage R&D activity and innovation at a difficult economic time.”
The measure should provide up to NZD 70 million (USD 51 million) of additional support to R&D performing businesses, it said.
The R&D tax credit plan currently has limited refundability rules.
Companies will still have the option of accessing the old limited refundability rules in “year 1” if they prefer, the government said. The broader refundability rules will apply by default, but companies that prefer to apply the old “year 1” limited refundability rules will be able to do so. They will have the option to note their preference when they file their R&D claims.
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