Short answers to the questions the academy is asked most about New Zealand's Research and Development Tax Incentive, grouped the way the country guide is organised: eligibility, costs and calculation, claiming and deadlines, and reviews. Each answer gives the rule in a sentence or two and links to the page that covers the subject in full, with the official sources. This page carries FAQPage structured data.
Eligibility
Who can claim the RDTI?
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. The minimum keeps very small claims out of the scheme, and a small business can still access the credit by commissioning an approved research provider such as a university or research institute. The business must control the R&D, bear the financial risk and own or be able to use the results. See eligibility.
What is a core R&D activity?
An activity that uses a systematic approach to create new knowledge or new or improved processes, services or goods, and to resolve scientific or technological uncertainty. Uncertainty exists where a competent professional could not work out whether or how something could be done from publicly available knowledge. See eligibility.
What is a supporting activity?
An activity that is required for and integral to a core activity, such as building a test rig, preparing samples or assembling a dataset. It must be tied to a named core activity in the approval application, and some activities are excluded from being supporting activities by schedule 21. See eligibility.
Is our software development eligible?
Only where it resolves a technological uncertainty that a competent professional could not deduce from publicly available knowledge. Routine de-bugging, internal administration software and building products with known techniques are excluded, and Inland Revenue declines applications that describe the product rather than the technical unknown. See industries.
Does the R&D have to succeed?
No. A core activity is defined by its purpose and its systematic approach, not its result. An experiment that disproves the hypothesis still created new knowledge, and the activity ends when the uncertainty is resolved or abandoned.
Can we include R&D done overseas?
Only where it is integral to a core activity performed in New Zealand, and only up to 10% of total eligible expenditure. See eligible expenditure.
Costs and calculation
How much is the credit?
15% of eligible R&D expenditure, on a minimum of NZ$50,000 and a maximum of NZ$120 million a year. A business with NZ$500,000 of eligible expenditure earns a credit of NZ$75,000, applied first against its income tax for the year. See eligible expenditure.
Which costs are eligible?
Employee remuneration for time on R&D, contractors and approved research providers, consumables, depreciation on R&D assets and apportioned overheads. Interest, the purchase of land and depreciable property, and R&D performed for another person are not eligible. See eligible expenditure.
Is the credit refundable?
In some cases. Refunds are capped, including by reference to labour-related taxes such as PAYE paid for the year. The credit is first applied against the year's income tax; the refundable excess is paid up to the cap and the rest carried forward, subject to shareholder continuity for companies. See refundability.
Does government funding affect the claim?
Government funding for the same work should be reviewed for its effect on eligible expenditure before claiming, and certain public sector bodies are not eligible. See eligibility.
Claiming and deadlines
Do we need approval before we claim?
Yes. General approval, or criteria and methodologies approval for significant performers, for the income year. Apply for general approval by the last day of the 3rd month after the end of the income year, through myIR. Approval can cover up to 3 income years for continuing activities, but each year still needs its own supplementary return. See general approval.
What is a significant performer?
A business expecting more than NZ$2 million of eligible expenditure in the year, which may apply for criteria and methodologies approval instead of approval of each activity. See significant performer approval.
How is the credit claimed?
File the income tax return, then the R&D supplementary return within 30 days after the income tax return due date, or the extension of time due date, through myIR. See supplementary return.
What if we miss the approval deadline?
Inland Revenue does not accept late general approval applications, so there is no approval and no credit for the year. See deadlines.
Reviews
What does Inland Revenue review?
The activities at the approval stage, and after the supplementary return, whether the approved activities were performed as described and what they cost. Approvals obtained on incorrect information can be revoked. Disputes follow the notice of proposed adjustment process. See Inland Revenue reviews and documentation.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.