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New Zealand: R&D feasibility expenditures, loss continuity rules proposals

New Zealand: R&D feasibility expenditures

The Ministers of Finance and Revenue on 23 September 2019 announced that proposals to allow tax deductions for feasibility expenditures would be allowed to proceed.

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A tax bill to be introduced in early 2020 would:

  • Allow feasibility expenditures:
    • Totaling less than $10,000* in a year to be immediately allowed as a tax deduction
    • Totaling greater than $10,000 to be deducted over five years, if the expenditure does not result in a tax deduction (i.e., a “black hole” expenditure presently)
  • Change the “shareholder continuity rules” for tax losses to clarify that they work for start-ups that are trying to attract new capital investment
  • Review the research and development (R&D) tax loss cash-up rules (those rules were introduced prior to the new R&D tax credit and the proposal currently before Parliament to make the credit refundable)


Read a September 2019 report prepared by the KPMG member firm in New Zealand

 

*$ = New Zealand dollar

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