Australia vs New Zealand: R&D incentives compared

Groups with companies on both sides of the Tasman and advisors who serve both markets compare these two schemes often. Both are called the R&D Tax Incentive and both divide work into core and supporting activities, but one is an offset tied to the company tax rate and the other a flat credit, and one needs registration after the year while the other needs approval before the claim. This page sets them side by side and computes one set of costs under both.

At a glance

Point	Australia	New Zealand
Scheme and administering body	Research and Development Tax Incentive (R&DTI). Department of Industry, Science and Resources, on behalf of Industry Innovation and Science Australia, and the Australian Taxation Office (ATO)	Research and Development Tax Incentive (RDTI). Inland Revenue
Form of benefit	Tax offset	Tax credit
Headline rates	Refundable offset: corporate tax rate plus an 18.5% premium, for aggregated turnover under A$20 million. Non-refundable offset: corporate tax rate plus 8.5% (R&D intensity up to 2%) or 16.5% (above 2%), for aggregated turnover of A$20 million or more. Offset for R&D expenditure of up to A$150 million a year	15% of eligible R&D expenditure. Minimum NZ$50,000 a year, unless you use an approved research provider. Maximum NZ$120 million a year
Refundability	Yes, for aggregated turnover under A$20 million	In some cases. Refunds are capped, including by reference to labour-related taxes
Who can claim	Corporations incorporated in Australia, foreign corporations that are Australian residents for tax purposes, and some foreign corporations with a permanent establishment in Australia, spending at least A$20,000 on eligible R&D in the income year unless using a research service provider or contributing to the Cooperative Research Centres Program	Businesses carrying out R&D in New Zealand that spend at least NZ$50,000 on eligible R&D in the income year, unless they use an approved research provider
Definition of qualifying work	Core R&D activities: experimental activities whose outcome cannot be known in advance from current knowledge, following a systematic progression from hypothesis to experiment, observation and evaluation, leading to logical conclusions, to generate new knowledge. Supporting R&D activities: directly related to a core activity, some for the dominant purpose of supporting it	A core activity uses a systematic approach to create new knowledge or new or improved processes, services or goods, and to resolve scientific or technological uncertainty. A supporting activity must be required for and integral to a core activity
Registration or approval step	Register R&D activities with the department within 10 months of the end of the income year, for each income year	General approval, or criteria and methodologies approval, for the income year. Apply for general approval by the last day of the 3rd month after the end of the income year
Claim deadline	After registration, in the company tax return, by completing the R&D tax incentive schedule	Supplementary return within 30 days after the income tax return due date, or the extension of time due date. File the income tax return for the year first
Written description required	The registration application describes each core and supporting activity, including the hypothesis, experiment, observations, evaluation and conclusions, and the estimated expenditure	For each core activity: the scientific or technological uncertainty, the new knowledge or improved process, service or good sought, the systematic approach and the start and end dates. For each supporting activity: the related core activity and how it is required for and integral to it
Review body and time limit	The department may examine registered activities and make eligibility findings binding the Commissioner of Taxation; the ATO reviews expenditure and the offset. Amendment within 2 years (small business entity) or 4 years (others) from the notice of assessment	Inland Revenue reviews on a risk basis and may revoke or amend an approval based on incorrect information or materially different activities. Amendment within 4 years after the end of the tax year in which the return was filed

Australia's 2026-27 Budget (12 May 2026) proposed measures from 1 July 2028, not yet legislated: a 4.5 percentage point increase in offset rates for core R&D, removal of supporting R&D activities from eligibility, an intensity threshold of 1.5% instead of 2%, a refundable offset turnover threshold of A$50 million, minimum notional deductions of A$50,000, a maximum expenditure threshold of A$200 million, and no refundable offset for companies more than 10 years old. The current rules apply until then.

Where the schemes differ in practice

Registration after the year against approval before the claim

An Australian R&D entity must register for each income year in which it wishes to claim. Registration is not a decision that the activities are eligible, and late applications without an extension are refused. Certainty in advance comes from an Advance Finding, applied for before the end of the income year (registration with AusIndustry, advance and overseas findings). In New Zealand approval comes first. General approval may cover the income year and up to 2 following income years for continuing activities, and binds the Commissioner as to eligibility to the extent the activities are performed as described. Inland Revenue does not accept late applications. (general approval).

How the rate is set and who receives cash

A base rate entity pays company tax at 25%, so its refundable offset rate is 43.5%; companies that are not base rate entities pay 30%, giving non-refundable offsets of 38.5% and 46.5%. (refundable versus non-refundable, R&D intensity). The New Zealand credit is applied against the income tax liability for the year; the excess is refunded up to the refundability cap, being the year's PAYE, employer superannuation contribution tax and fringe benefit tax, adjusted for wholly owned groups, and any remainder is carried forward subject to the shareholder continuity rules for companies (refundability).

Supporting activities

In Australia a supporting activity must be directly related to a core activity, and one that is an excluded activity, or that produces or is directly related to producing goods or services, qualifies only if undertaken for the dominant purpose of supporting core R&D activities (core versus supporting activities). In New Zealand a supporting activity must be required for and integral to a core activity, and schedule 21 lists excluded activities (New Zealand eligibility).

Work done outside the country

Australian R&D activities conducted outside Australia are eligible only under an Overseas Finding, applied for before the end of the income year in which they are conducted: the activity must have a significant scientific link to Australian core activities, must be one that cannot be conducted in Australia for a listed reason, and must cost less than the Australian activities. (advance and overseas findings). New Zealand instead limits eligible expenditure on R&D performed outside New Zealand to 10% of the total for the year, and it must relate to R&D integral to a core activity performed in New Zealand (eligible expenditure).

Two agencies against one

An Australian claim can be checked twice, by the department on eligibility and by the ATO on the expenditure. A finding may go to internal review within 28 days and then to the Administrative Review Tribunal (ATO and DISE reviews). In New Zealand eligibility is settled at approval, and Inland Revenue later expects records showing the approved activities were performed as described, with eligible expenditure linked to each. Disputes run through the notice of proposed adjustment process, then the Taxation Review Authority or the High Court (Inland Revenue reviews).

Illustrative example

Illustrative example. Fennimore Composites, a hypothetical company, spends 600,000 in a year on activities that qualify under both schemes: 500,000 in salaries and superannuation of engineers who spend all their time on the work and 100,000 in materials consumed in trials. The figures are used in both currencies, all work is done in the home country, and the registration or approval step was completed in time.

Step	Australia	New Zealand
Assumptions	Aggregated turnover under A$20 million; a base rate entity paying company tax at 25%; the A$20,000 minimum is met	The NZ$50,000 minimum is met; income tax liability for the year of NZ$40,000; PAYE, employer superannuation contribution tax and fringe benefit tax for the year total NZ$120,000
Arithmetic	Notional deductions A$600,000. Refundable offset rate 25% plus 18.5% = 43.5%. 43.5% of A$600,000 = A$261,000	Eligible expenditure NZ$600,000. 15% of NZ$600,000 = NZ$90,000
What the benefit is worth	Notionally deducted expenditure cannot also be deducted, so A$150,000 of the offset (25% of A$600,000) replaces the ordinary deduction and the net benefit is A$111,000, the 18.5% premium	NZ$40,000 of the credit is applied against the income tax liability; the excess of NZ$50,000 is refunded because it is within the NZ$120,000 cap; nothing is carried forward
If no tax were payable	The whole A$261,000 is refunded, because the offset is refundable for aggregated turnover under A$20 million	The NZ$90,000 is refunded up to the cap; any excess is carried forward to later income years

Which to study first

Put the New Zealand approval date in the calendar first: it falls three months after the year end, against ten for Australian registration, and unapproved activities earn no credit. For the definitions, start with the Australian elements, which the New Zealand application mirrors in its own words. For the money, start with the Australian refundable and non-refundable page.

Educational material, not advice. Eligibility and treatment depend on the scheme and the facts.

Australia vs New Zealand