The implementation of the Research & Development Tax Incentive has not exactly
been a smooth ride but there are lessons to be learned. In-year payments are
still unavailable to support R&D
activities even if its predecessor, the Growth Grant regime, had quarterly cash
payments but the good news is that the Government has made changes to make sure
more R&D activities will
be made eligible.
Software activities are eligible for the RDTI given they meet the
requirements. To ensure a strong software claim, you need to clearly explain the
technological uncertainty and that your undertaking is not a standard
development. You need to demonstrate only one thing – that you’re trying to
solve a technological or scientific uncertainty.
The RDTI
only focuses on increasing the R&D
activities of businesses, so even unsuccessful commercial outcomes still
qualify. If objectives aren’t reached, valuable knowledge is still gained. The
size of the market of a future product is also immaterial.
You also don’t need a science degree to make a strong claim.
What’s important is your ability to demonstrate technological or scientific
uncertainty. The regulators who assess the claims are experienced and highly
intelligent and would understand technical information but it might be best to
avoid using jargon to avoid delays. Your technical team should use bullet
points and draft the activity descriptions, not your finance team unless
someone in your finance team has the right skills or experience with successful
claims. Know the support you will need and plan with the right persons from the
start so you don’t waste precious resources.
Don’t forget to keep timesheets! This is a good way to track
time spent on R&D and
demonstrate accuracy. Your records must be able to substantiate the R&D activity and identify
when the uncertainty arose and was resolved, and clearly tie each expenditure
to an activity.
You need to submit a General Approval of activities within
seven days and two months after the end of financial year but it would be good
to submit it as soon as you know the activities you will undertake. This will
give you the value of your tax credit and likely a quicker assessment by
avoiding peak claim times.
Our Business Clients
Cam recently caught up with Grant Douglas, owner of Makers Fabrication, to get his perspective on a few things. If you want to chew the fat with Grant further – get in touch and we’ll set it up.
Besides being pretty all-round top blokes, Matt and AJ are bloody screwed on when it comes to growing their business and smashing their goals.
Flick us an email or give us a buzz!
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011 New Zealand
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975
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