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Time to “Cash Out” Your R&D tax losses

Sat July 9th 2016

Time to "Cash Out" Your R&D tax losses

Is Research and Development a big part of your business? Good news, the Government has just introduced a new R&D tax loss credit allowing more innovative companies to access their R&D tax sooner. R&D focused companies, which normally have high upfront costs are now able to gain access to their tax losses when they need it most. This takes effect next year.

Basic eligibility criteria

To be eligible your company must:

• be a tax resident in New Zealand

• have a internet loss within the corresponding tax year

• have eligible R&D expenditure for the financial gain year

• have ample R&D wage intensity

• meet the company eligibility criteria, and

• own (solely or jointly) the belongings and ability that results from the R&D activity.

Your company will not be eligible if it is:

• treated as a resident of a far off country or territory underneath a double tax agreement, or

• a browse company, or

• listed on a recognised exchange, eg, a securities market

The R&D wage intensity test

One of the bottlenecks to be recognized eligible to say this step-down is that the therefore referred to as " R&D wage intensity take a look at ". so as to be eligible you want to pay two hundredth or additional of your total labour expenditure on


The formula to calculate your share of R&D labour expenditure is:

• total R&D labour expenditure ÷ total labour expenditure x one hundred

Total R&D labour expenditure is outlined because the total of:

• salary or wages paid to staff for polishing off R&D

• amounts paid to shareholder-employees as financial gain for polishing off R&D, and

• the prices of R&D dispensed by a contractor excluding GST x zero.66 (the number is meant to exclude profit and non-wage value parts of the contract price)

Total labour expenditure is that the total of:

• salary or wages paid to staff

• amounts paid to shareholder-employees as financial gain, and

• the prices of analysis and development dispensed by a contractor excluding GST x 0.66

If you need a better understanding get in contact with Norton Chartered Accountants now: