New Zealand businesses are now eligible to claim a 43.5% cash rebate for R&D costs incurred in Australia

The 43.5 cent ‘cash back’ benefit is now available to some companies incorporated in New Zealand and who undertake R&D in Australia.

Who is eligible?
New Zealand incorporated entities may be eligible where they have setup:

  • an Australian resident company;
  • a corporation that is an Australian resident for taxation purposes; or
  • a permanent establishment in Australia.

What’s it worth?
The following table provides a more specific overview:

Condition Requirement
Group Turnover All companies in group collectively have a turnover less than AU$20 Million
Tax Position Australian Company is in Tax Loss
Benefit 43.5% of costs refunded  (i.e. AU$0.435 refund for every dollar spent)

Example 1:

An Australian subsidiary company,  may be eligible for the R&D tax incentive, where:

  • the Australian company is wholly owned by its N.Z parent company and qualifies as an R&D entity;
  • The N.Z Company controls the Australian Resident Company;
  • The N.Z Company, the Australian Company, and any other companies that the two companies are associated with, have a collective aggregated turnover of less than AU$20 million;
  • Under an agreement, The N.Z Company agrees to undertake R&D activities in its Australian office solely for the benefit of the Australian Company;
  • In the agreement, the Australian Company does not own any Intellectual Property (I.P) generated out of the N.Z Company, but is legally entitled to all I.P. arising from the R&D activities;
  • The Australian Company incurs AU$100,000 in R&D expenditure for the 2017 Financial Year;
  • The consideration between the Australian and N.Z companies is at arm’s length and will be paid even if the R&D is not successful.
Example 1: Expenditure
Australian Subsidiary Company’s R&D expenditure $100,000
Australian Subsidiary Company’s R&D Tax Incentive Benefit $43,500 Cash Refund

Requirements for setting up an Australian Company

Foreign companies will need to set up an Australian company, and expect the following:

  • Costs to setup the company to not exceed AU$1,500 (plus GST) to incorporate an eligible Australian entity in order to claim the R&D Tax incentive.
  • Company incorporation within Australia can take between 2-3 days.
  • Foreign entities will require the availability of an Australian resident director
  • The Australian Financial year runs from 1 July to the 30 June, however foreign entities can submit an application to the ATO for a substitute financial year to align with their parent company’s timeframes.

How do I claim my expenditure?

  • Eligible Australian subsidiaries will need to register their activities with AusIndustry not later than 10 months after the Australian company’s year end.
  • R&D expenditure is claimed through the lodgement of an R&D Tax Incentive claim as part of their annual income tax return.

If you have a New Zealand incorporated entity and interested in claiming the R&D Tax Incentive in Australia, contact us to determine your eligibility and discuss your options.

Click here to compare Australian R&D ‘cash out’ R&D tax incentives to other countries around the world.

Contact Details

Adam Rogers
Swanson Reed
R&D Tax Specialist
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Phone No: +64 9 889 7700
David Tomasi
Moore Stephens
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James Tng
Moore Stephens
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