From garden shed tinkerers to software developers, Kiwis have always had the entrepreneurial flair, motivation and the creativity that can turn big ideas into great businesses.
But as the business starts to grow there are times when big ideas can suffer due to lack of funds. It’s especially difficult for smaller companies and individuals who often have to risk their personal finances to get their big ideas off the ground. Frustratingly, a lot of great concepts never make it off the drawing board – purely because of a lack of initial cash flow.
That’s why last year the government introduced the Research and Development (R&D) Loss Tax Credit – to help Kiwi entrepreneurs turn their big ideas into reality. It’s designed to improve cash flow when businesses need it most – when they are developing their idea. Once they have something to sell, and have money coming in, the rewards will be well worthwhile – but with R&D, we know a lot has to go in before anything can come out.
CASH TO KEEP CREATING
The R&D Loss Tax Credit aims to encourage innovation and ease the financial challenges investment in intensive R&D can create. By giving entrepreneurs access to some of their tax losses sooner it can improve cash flow, enabling them to reinvest back into their business.
Where previously businesses would carry their tax losses forward and deduct them from their income once they begin to make a profit, now up to 28% of tax losses can be ‘cashed out’ earlier. For the 2016-17 tax year they can claim a credit of up to $224,000.
STILL NOT CONVINCED? CHECK OUT THIS BUSINESS WHO WERE SUCCESSFUL LAST YEAR
Last year, Aeronavics was one of hundreds of innovative businesses who successfully received the R&D tax credit and used it on their ongoing R&D costs. Find out more about their story below:
DON’T MISS OUT: FIND OUT IF YOU’RE ELIGIBLE AND APPLY TODAY
If you meet the criteria, you or your company can start claiming back tax losses from the 2016/17 tax year. Find out if your company is eligible and apply online at www.ird.govt.nz/rd-credit. But don’t delay; to receive the Research and Development Loss Tax Credit, you must submit your application to Inland Revenue before your income tax filing due date for the 2016/17 financial year.