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MX 3: Wage intensity criteria
or “How much of your wage spending must be on R&D to qualify for tax credits”
You could also call this:

“Tax credits for research and development losses”

You can get a tax credit for research and development (R&D) losses. The amount of credit you can get depends on the tax year and is limited by a few factors.

For different tax years, there are maximum amounts you can claim:

For the 2015-16 tax year, you can claim up to $500,000 times the basic company tax rate. For the 2016-17 tax year, it’s up to $800,000 times the basic company tax rate. For the 2017-18 tax year, it’s up to $1,100,000 times the basic company tax rate. For the 2018-19 tax year, it’s up to $1,400,000 times the basic company tax rate. For the 2019-20 tax year, it’s up to $1,700,000 times the basic company tax rate. For the 2020-21 tax year and later, it’s up to $2,000,000 times the basic company tax rate.

Your tax credit will be the smallest amount of:

  1. The maximum amount for your tax year (as listed above)
  2. Your net loss for the tax year times the basic company tax rate
  3. Your total R&D spending for the income year times the basic company tax rate
  4. 1.5 times your total R&D labour costs for the income year (as described in section MX 3(3)(a)) times the basic company tax rate

When you claim an R&D loss tax credit, Section 70C of the Tax Administration Act 1994 applies to your claim.

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Next up: MX 5: Cancellation of R&D tax losses

or “How cancelled R&D tax loss credits affect your yearly tax losses”
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Part M Tax credits paid in cash
Tax credits for R&D tax losses

MX 4R&D loss tax credits

  1. For a tax year, the person has a tax credit equal to the least of the following:

  2. $500,000 multiplied by the basic tax rate for a company, if the tax year is the 2015–16 tax year:
    1. $800,000 multiplied by the basic tax rate for a company, if the tax year is the 2016–17 tax year:
      1. $1,100,000 multiplied by the basic tax rate for a company, if the tax year is the 2017–18 tax year:
        1. $1,400,000 multiplied by the basic tax rate for a company, if the tax year is the 2018–19 tax year:
          1. $1,700,000 multiplied by the basic tax rate for a company, if the tax year is the 2019–20 tax year:
            1. $2,000,000 multiplied by the basic tax rate for a company, if the tax year is the 2020–21 or later tax year:
              1. the person’s net loss for the tax year multiplied by the basic tax rate for a company:
                1. the person’s total R&D expenditure, incurred in the income year corresponding to the tax year, multiplied by the basic tax rate for a company:
                  1. 1.5 multiplied by the person’s total R&D labour expenditure, incurred in the income year corresponding to the tax year and described in section MX 3(3)(a), multiplied by the basic tax rate for a company.

                    1. Section 70C of the Tax Administration Act 1994 applies for an R&D loss tax credit.

                    Notes
                    • Section MX 4: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on , by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                    • Section MX 4(1) heading: inserted, on (with effect on 1 April 2015), by section 166 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).