This track is for founders and early finance hires of a New Zealand company that is loss-making or pre-revenue and is deciding whether, when and how to claim the Research and Development Tax Incentive (RDTI). Two things change. The benefit is a flat 15% tax credit for eligible R&D expenditure, and for a company with no income tax to pay the question is how much is refunded, because refunds are capped, including by reference to labour-related taxes. And approval comes before the claim: general approval must be applied for by the last day of the 3rd month after the end of the income year, and unapproved activities earn no credit. The RDTI is administered by Inland Revenue.
How the New Zealand rules change the program
| Module | What is different in New Zealand | Country page |
|---|---|---|
| Is it worth claiming | Rate: 15% of eligible R&D expenditure. Minimum NZ$50,000 a year, unless you use an approved research provider. The credit is applied against the income tax liability for the year, with the excess refunded subject to the refundability cap and any remainder carried forward. The cap is the total of the person's PAYE, employer superannuation contribution tax and fringe benefit tax for the year, with adjustments for wholly owned groups. | Refundability |
| Setting up from day one | The general approval application asks 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; and for each supporting activity: the related core activity and how the activity is required for and integral to it. | General approval |
| Funding interactions | A person is eligible if they control the R&D activities, bear the financial risk and effectively own the results; expenditure on R&D performed for another person is ineligible. Unused R&D tax credits are carried forward to later income years, subject to the shareholder continuity rules that apply to companies, so a funding round can forfeit carried forward credits. Check Inland Revenue's guidance on how government funding affects eligible expenditure before claiming for a funded project. | Eligibility |
| Your first claim | Three steps through the research and development tax incentive account in myIR: general approval for the income year, the income tax return, then the supplementary return within 30 days after the income tax return due date, or the extension of time due date. | How to claim |
Forms and deadlines
| Form or step | Deadline or timing | Country page |
|---|---|---|
| General approval application (myIR) | By the last day of the 3rd month after the end of the income year. May be granted for the income year of the application and up to 2 following income years for activities that continue. Inland Revenue does not accept late general approval applications. | General approval |
| Income tax return (IR4) | Due 7 July for a 31 March balance date, or 31 March of the following year for taxpayers with a tax agent and an extension of time. | Deadlines |
| R&D supplementary return (myIR) | Within 30 days after the income tax return due date, or the extension of time due date; reports eligible expenditure by approved activity and calculates the tax credit and any refundable amount. | Supplementary return |
Key rules to know
The cap decides the cash. The refundable amount of the R&D tax credit for an income year is the credit remaining after offset against income tax, limited to the refundability cap, under the rules that apply from the 2020-21 income year. Salaries paid through PAYE raise the cap; contractor invoices do not; and the cap is tested on the same income year as the credit, so a payroll decision is also a tax decision.
What a core activity is. A core research and development activity is an activity that is conducted using a systematic approach, has a material purpose of creating new knowledge or new or improved processes, services or goods, and has a material purpose of resolving scientific or technological uncertainty, and is not an excluded activity. Inland Revenue guidance states that for software the uncertainty must be scientific or technological rather than commercial, and that applying known techniques, frameworks and methods to build a new product does not resolve a technological uncertainty.
Why applications are declined. Inland Revenue has identified common reasons for declining activities, including the absence of scientific or technological uncertainty, descriptions of business objectives rather than R&D, excluded activities and insufficient detail on the systematic approach.
What counts as eligible expenditure. Salary or wages and other employee remuneration, including employer superannuation contributions, to the extent the employee performs R&D activities and expenditure on a contractor performing R&D on behalf of the claimant, with overheads and depreciation loss to the extent of the R&D use. An approved research provider is a person approved by the Commissioner to perform R&D on behalf of others, and expenditure on one is not subject to the NZ$50,000 minimum.
Worked example
Illustrative example. Kaikoura Marine Tech Limited, a hypothetical pre-revenue company with a 31 March 2026 balance date and a tax agent with an extension of time, ran one core activity, a systematic series of trials on whether a new hull coating could resist biofouling at the target temperatures, with two supporting activities. It meets the corporate eligibility criteria for a refund.
| Step | Figures | Result |
|---|---|---|
| Setting up from day one | General approval applied for in myIR by 30 June 2026, describing the uncertainty, the new knowledge sought, the systematic approach and the dates | Approved for the 2026 income year and the 2 following income years |
| Eligible expenditure | Salaries and employer superannuation contributions apportioned by timesheet NZ$360,000; contractor NZ$80,000; overheads NZ$40,000; depreciation loss on test equipment NZ$20,000 | NZ$500,000, above the NZ$50,000 minimum |
| Is it worth claiming | 15% of NZ$500,000 | Credit NZ$75,000 |
| Funding interactions: the cap | Income tax nil, so the whole credit is excess. PAYE and employer superannuation contribution tax for the year NZ$60,000; no fringe benefit tax | Refundable amount NZ$60,000; NZ$15,000 carried forward |
| Your first claim | IR4 filed by 31 March 2027 under the extension of time; supplementary return filed in myIR by 30 April 2027 | NZ$60,000 refunded after processing |
Had the engineers been contractors and the founders unpaid, the labour-related taxes would have been close to nil and almost the whole NZ$75,000 would have been carried forward rather than refunded. If Kaikoura sells a majority stake in the 2027 income year, the NZ$15,000 carried forward is subject to the shareholder continuity rules that apply to companies and may be forfeited.
Related country guide pages
Self-check questions
Answer each question, then open it to compare.
A loss-making startup has NZ$500,000 of eligible expenditure, no income tax to pay and NZ$60,000 of PAYE and employer superannuation contribution tax for the year. How much of its RDTI credit is refunded?
A company with a 31 March 2026 balance date did its first R&D during that year and has not applied for anything. What must it do by 30 June 2026, and what if it misses the date?
Two founders pay themselves nothing and the development is done by three contractors. Why does that reduce the cash the company receives from the RDTI?
The startup is about to sell a majority stake to a new investor. What should it check about credits carried forward from earlier years?
A startup builds a product for a customer who pays for the work and owns the result. Can it claim the RDTI on that work?
Official sources
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Educational content only, not tax advice. See the disclaimer.