HOW DOES THE RDTI WORK?

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Transition Support Payment update

April 2022

Transition Support Payment update

Here’s some updated information and clarification about the Transition Support Payment.

This payment is designed to help former Growth Grant recipients maintain investment in R&D while moving to the Research & Development Tax Incentive (RDTI).

It can bring total R&D support to a similar level as the Growth Grant, provided a similar level of R&D is maintained.

Clarifying the “good faith RDTI attempt”

When you apply for the Transition Support Payment, you are asked to provide a Directors’ Attestation that:

  • you have accurately assessed your Growth Grant eligible R&D expenditure, and
  • made a good faith attempt to participate in the RDTI.

“Good faith RDTI attempt” means you have included on your RDTI application all R&D activities that you reasonably consider to be eligible for the RDTI. Any eligible activities omitted from your RDTI application, therefore, cannot be included in your Growth Grant R&D expenditure calculation. If this affects your intention to apply for the transition support payment, please contact us at RDTIhelp@callaghaninnovation.govt.nz

Accounting treatment
‍The accounting treatment applied to expenditure used to calculate the Transition Support Payment must be the same as that applied to expenditure claimed under the RDTI. For example, if you have capitalised certain costs under the RDTI in a given financial year, they cannot be included in your calculation of your notional Growth Grant R&D expenditure for that financial year.

Grouping rules
‍If you previously claimed the Growth Grant for a group of companies, only those companies in the group that also claimed the RDTI are eligible for the Transition Support Payment. Questions in the Transition Support Payment application will help you identify whether any companies need to be excluded - see “How to apply” below for details on how to access the application form.

Updated Directors’ Attestation
‍Please note that the Directors’ Attestation form was updated in March 2022 to include reference to the good faith attempt and grouping rules outlined above. You can view an example of the updated form here.

How to apply for the Transition Support Payment
‍Applications can be made via Callaghan Innovation’s online IMS portal. Depending on your situation, you may be eligible for payment:

  • for some or all of the 2019/20, 2020/21 and 2021/22 income years
  • whether or not your RDTI application is successful.

When you log into IMS, it will automatically identify which income year/s you are eligible for, and give you access to the relevant application form/s, as they become available.

Note that before applying, you must have received your “R&D Tax Incentive: Transition Support Payment” letter from Inland Revenue. This will be sent to you:

  • after your Supplementary Return has been finalised, if your RDTI application was successful, or
  • after you receive your RDTI application decision, if your application was declined.

Application deadlines are:

  • 30 June 2022 for the 2019/20 income year
  • 31 October 2022 for the 2020/21 income year
  • 24 April 2024 for the 2021/22 income year.

We’re here to help
‍If you have any questions about the transition support payment, we’re here to help! Please contact us at RDTIHelp@callaghaninnovation.govt.nz and we will get back to you promptly.

You can also check out the relevant pages on the "Other R&D support" section of the RDTI website.

COVID 19 related due date extensions

March 2022

COVID-19 related due date extensions

Inland Revenue has announced extensions to the due dates for submitting some RDTI applications and supplementary returns.

These extensions apply if you have a particular end of income year/balance date AND you have been materially delayed or disrupted by the COVID-19 outbreak and its effects.

Our claims date finder has been updated to show which balance dates the extensions apply to. There is also an overview of the changes below.

The changes reflect variations to sections 33E, 68CB(2) and 68CC(3) of the Tax Administration Act 1994 - see details here.


 

Guidelines for digital technology sector available now

March 2022

Guidelines for digital technology sector available now

Inland Revenue has published guidelines for the digital technology sector that provide clarity on what R&D performed within the sector is included in the RDTI scheme.

The guidelines, on the Inland Revenue website, can be viewed and downloaded here.

Callaghan Innovation and Inland Revenue worked closely with the digital technology sector to develop the guidelines, which aim to help businesses:

  • understand the RDTI legislation’s intent
  • identify which elements within a broader commercial project or activities may be eligible for the RDTI
  • see how the RDTI can apply to digital technology related R&D projects
  • help you focus on what key information is needed in your RDTI application.

If you want to discuss whether your particular digital technology related R&D could be supported by the RDTI, or you have general questions about the scheme, Callaghan Innovation has Customer Engagement Specialists ready to help.

They can meet with you to help you develop your General Approval application, and can also review your draft application before you submit it for assessment. To contact them, email: RDTIHelp@callaghaninnovation.govt.nz

Other sector-specific guidelines are planned, to give more New Zealand businesses clarity on how their R&D could be supported by the RDTI.