For Small to Medium Enterprises (SMEs), research and development (R&D) can often be put on the backburner. R&D has, until now, meant SMEs need to justify significant expenditure before they’re able to claim back any tax credits.

However, a new proposed change in legislation is encouraging smaller businesses to finally take that leap and invest in some R&D, reducing the required minimum investment from $100,000 to $50,000 per year. A rise in the credit rate itself is also proposed, from 12.5% to 15%, making R&D more attainable.

The 15% tax credit will be available from the beginning of the 2019/20 income tax year, provided that the Taxation (Research and Development Tax Credits) Bill is passed into law.

This is all part of the Government’s commitment to raising overall New Zealand R&D expenditure to 2% of GDP in the next 10 years.

“The mission to raise New Zealand businesses’ investment in innovation is a critical one, as it is only through innovation that businesses and therefore the economy can grow.” – Kirk Hope, Chief Executive BusinessNZ.

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