Research and Development Tax Incentive – PwC Report

Published: 18 June 2021

The Research and Development Tax Incentive (RDTI) was launched in April 2019 to support New Zealand business investment in research and development (R&D) through a 15% tax credit on eligible expenditure. The RDTI is supported by the Ministry of Business, Innovation and Employment (MBIE), Inland Revenue and Callaghan Innovation.

The Government is committed to delivering a world-class RDTI scheme that incentivises investment by businesses in R&D and drives economic growth for New Zealanders.

To support this goal, MBIE commissioned an independent review of the early implementation of the scheme to identify how it was working so far and areas for improvement. The review was comprised of interviews with a range of stakeholders and focused on the experience of businesses and their advisors through the RDTI application process.

MBIE, Inland Revenue and Callaghan Innovation would like to thank those who participated in the review and took time to provide their feedback. These direct insights have highlighted some important improvements which we are now implementing to the RDTI.

In response to the review agencies are working together to:

  • Expand our engagement with customers. We have brought on customer engagement specialists who will work alongside Callaghan Innovation’s Primary Relationship Managers to provide greater support for more businesses through the application process.
  • Review and update the RDTI guidance to ensure it is fit for purpose. We have developed refreshed guidance which focuses specifically on eligible R&D activity. The refreshed guidance reflects a broader interpretation of what constitutes core eligible R&D activity meaning more R&D will be supported under the RDTI.
  • Work with businesses to produce sector specific guidance and tools for customers. We are now working with the software industry to develop the first of the sector specific guidelines.
  • Support businesses transitioning from the Growth Grant to the RDTI. A transitional support payment will be offered to former Growth Grant recipients allowing them to maintain the level of support for R&D while they become familiar with the refreshed R&D eligibility criteria under the RDTI and the process for applying.

Our engagement with other countries implementing R&D tax incentives internationally has shown refinements and improvements over the initial implementation phase was common. It will take time to embed these new changes and ensure the RDTI is operating as intended; striking a balance between providing access to the tax credit for many businesses as possible, while continuing to uphold the integrity of New Zealand’s tax system.

The inter-agency team will continue to work closely with stakeholders, taking on their feedback, as well as reflect on international best practice. Our goal remains to ensure businesses have access to support to continue doing world-class R&D in New Zealand.

We encourage R&D performing businesses to visit and subscribe to the custom-built RDTI Hub for further guidance, and to apply for the RDTI.

RDTI Hub(external link) — R&D Tax Incentive

Read the Implementation review and related documents

MBIE media contact