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Taxation (Research and Development Tax Credits) Bill (Consistent) [2018] NZBORARp 83 (11 October 2018)
Last Updated: 5 January 2019
11 October 2018
LEGAL ADVICE
LPA 01 01 23
Hon David Parker, Attorney-General
Consistency with the New Zealand Bill of Rights Act 1990: Taxation (Research and
Development Tax Credits) Bill
Purpose
- We
have considered whether the Taxation (Research and Development Tax Credits) Bill
(‘the Bill’) is consistent with the
rights and freedoms affirmed in
the New Zealand Bill of Rights Act 1990 (‘the Bill of Rights
Act’).
- The
Bill amends the Income Tax Act 2007 and the Tax Administration Act 1994. Its
main objective is to afford businesses the opportunity
to claim a research and
development (‘R&D’) tax credit of 15 percent for eligible
R&D expenditure.
- The
key features of the R&D tax incentive include:
- A tax
credit rate of 15 percent;
- A
$120 million cap on eligible expenditure;
- A
minimum R&D expenditure threshold of $50,000 per
year;
- A
limited form of refunds for the first year of the scheme that will mirror the
R&D tax-loss cash-out scheme run by Inland Revenue.
A more comprehensive
policy will be in place for the second year of the scheme;
- A
definition of R&D that ensures the credit can be accessed more easily across
all sectors, including the technology sector;
- The
inclusion of State Owned Enterprises, Māori Authorities, industry research
cooperatives, levy bodies, and minority-owned
subsidiaries of select Crown
entities; and
- The
15 percent tax credit will be available from the beginning of a business's
2019/20 income year.
- We
also note that new section 68CE of the Bill specifies that the Commissioner of
Inland Revenue must publish the names of the persons
or entities who have
received research and development tax credits and where the amount of their
research and development tax credit
falls for a tax year (using appropriate
dollar bands).
- We
have concluded that the Bill appears to be consistent with the rights and
freedoms affirmed in the Bill of Rights Act.
Jeff Orr
Chief Legal Counsel Office of Legal Counsel
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