A world-leading payments system is expected to provide a significant cash flow boost for Kiwi innovators, Minister of Research, Science, and Innovation Ayesha Verrall says.
Announcing that applications for ‘in-year’ payments of the Research and Development Tax Incentive (RDTI) were open, Ayesha Verrall said it represented a win for businesses eager to invest in research and development.
“New Zealand’s introduction of in-year payments is considered a global first,” Dr Verrall said.
“We’re enabling businesses to receive 15% credit on eligible research and development expenditure as regular payments throughout the year, rather than having to wait for the money to be paid out after the end of the tax year.
“We know research and innovation is critical to meeting the biggest challenges and opportunities facing New Zealand, from combating climate change and preparing for and responding to natural disasters, to supporting our health and wellbeing, and increasing and growing the prosperity and resilience of New Zealanders.
“This Government wants to make things as easy as possible for business – New Zealand currently invests roughly half as much as a share of our economy in R&D as comparable countries. These in-year payments are a big step forward in making R&D more attractive.”
Considerable progress had been made with the RDTI supporting around $1.7 billion of business investment to date, corresponding to over $250 million in tax credits for innovative Kiwi businesses.
With the introduction of in-year payments, this would grow even further as more businesses were able to get involved with ready access to funds, Ayesha Verrall said.
“Ongoing investment in research and development grows the New Zealand economy. It fuels innovation, drives economic diversification, and increases productivity.”
Early-stage startups and other pre-profit R&D-intensive businesses were set to benefit the most as the early payments would help businesses manage cashflow – particularly salary costs – instead of having to wait until after they had submitted their income tax returns at the end of the tax year to receive support, Dr Verrall said.
The in-year payments will be provided through an interest-free government loan, with cash payments at regular intervals during the year based on the business’s R&D expenditure.
This loan will be repayable when the corresponding RDTI credit is available.
More information is available at https://www.rdti.govt.nz.
Source: Minister of Research, Science and Innovation