The reviews and audits page sets out the framework: approval, revocation, penalties and the disputes process. This page is about practice: how Inland Revenue's RDTI team assesses applications, what it asks in a technical meeting, how it reviews supplementary returns, and how a business prepares. The approval model means most of the technical conversation happens before the claim, which is a different rhythm from the other six countries.
What it is
| Stage | What happens | Typical timing |
|---|---|---|
| Application triage | The application is checked for completeness and the activities are read against the definition and schedule 21 | Weeks after submission |
| Clarification | Written questions through myIR on the uncertainty, the state of knowledge or the systematic approach; requests for further detail | Weeks |
| Technical meeting | A call or meeting with the technical staff, sometimes with external technical input engaged by Inland Revenue | Where needed |
| Decision | Each activity approved or declined with reasons | Within Inland Revenue's published timeframe for most applications |
| Supplementary return review | Risk-based review of expenditure and performance of activities, often before a refund is paid | After filing |
| Revocation or adjustment | Where approval rested on incorrect information or activities differed, or expenditure was overstated | Within the time bar |
Who it applies to
Every applicant goes through assessment; a proportion of supplementary returns are reviewed. Inland Revenue has described its focus areas in guidance and in its correspondence with applicants: software applications that describe products rather than technological uncertainty; activities that are preproduction or routine; claims where the business performs R&D for others; overseas work above the cap; and expenditure not supported by time records. Significant performers with criteria and methodologies approval are reviewed on whether the approved process was applied, using sampled activities.
How it works
Assessing the application. The assessor asks three questions of each core activity: is there a scientific or technological uncertainty that a competent professional could not resolve from publicly available knowledge; is there a material purpose of creating new knowledge or a new or improved process, service or good; and is the approach systematic. Applications that answer them in the applicant's own technical terms, with the state of knowledge described, are approved quickly. Applications written around the product or the business case draw clarification questions and, if the answers do not surface an uncertainty, a decline.
The technical meeting. Inland Revenue wants to hear from the people doing the work. The meeting is conversational: what did you not know, what did you try, how did you measure it. External technical advisers engaged by Inland Revenue may attend and ask about the field's state of the art. Advisers to the applicant can attend but should let the technical staff speak.
Reviewing the supplementary return. The review is mostly financial: time allocations to timesheets, remuneration to payroll, contractors to contracts and locations, the overseas cap, feedstock, grants and the refundability inputs. Inland Revenue also asks for evidence that the approved activities were performed in the year as described, and where the work drifted it asks whether a variation was sought. Refunds under review are held until the review ends.
Timescales and tone. Response periods are set in each request and extended on reasonable grounds. Reviews run through myIR correspondence and are generally cooperative; the disputes process is available where agreement cannot be reached.
Worked example
Illustrative example. Nelson Marine Software Limited, a hypothetical company, applies for general approval of a core activity described as "building the next generation of our vessel routing platform". Inland Revenue asks what the technological uncertainty is. The chief technology officer replies that the real problem was whether a weather-routing model could run on a vessel's onboard hardware within a two-minute window at the required resolution, which published approaches did not achieve, and describes the three model architectures benchmarked. Inland Revenue asks the company to redescribe the activity around that uncertainty and approves it; the surrounding platform work is left out. At the supplementary return the following year, Inland Revenue reviews the NZ$400,000 of expenditure, ties the engineers' time to the benchmark sprints and pays the refund. Nelson's next application is written around the uncertainty from the start.
Common questions
How long does approval take? Inland Revenue publishes a target timeframe; complex or unclear applications take longer, so apply early in the year.
Will the refund be paid during a review? Usually not until the review ends.
What if the technical staff who did the work have left? Inland Revenue will still want the records; a successor who can read them is better than an adviser who was not involved, so keep the records in a form others can follow.
Does an approved activity get re-examined every year? Approval lasts up to 3 years, but each year's supplementary return is reviewed on its own.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.