Research and Development Tax Incentive

Features of the incentive

The main features of the R&D tax incentive include:

• a credit rate of 15%
• a $120 million cap on eligible expenditure
• a minimum R&D expenditure threshold of $50,000 per year, unless the expenditure related to R&D contracted out to an Approved Research Provider
• the inclusion of state-owned enterprises, industry research cooperatives, levy bodies, and minority-owned subsidiaries of select Crown entities.

How businesses can apply

The Inland Revenue Department’s (IRD online tool can help businesses assess their eligibility for the R&D tax incentive).

Eligibility for the research and development tax incentive(external link) — IRD

Businesses that intend to claim the tax incentive can enrol via myIR before they officially apply by submitting a General Approval or a Criteria and Methodologies Application. Enrolment will provide businesses with an initial assessment of their eligibility and key information about how to apply.

More information about eligibility, approved research providers, record keeping obligations and in-year payments can be found on the Inland Revenue Department’s website and our R&D tax incentive website.

Research and development tax incentive(external link) — IRD

Is my business eligible?(external link) — R&D Tax Incentive NZ

Policy development

2025 Five-Year Evaluation

Under Section LY10 of the Income Tax Act 2007, the Minister of Science, Innovation and Technology is required to commission and table in Parliament an objective and independent evaluation of the RDTI every 5 years.

The first evaluation conducted by Motu Research with support from the University of Otago has been completed.

This evaluation indicates that:

• 1,752 firms accessed the RDTI, receiving an estimated $1 billion in tax credits (nominal).
• Supported firms spent $274,000 more per year on R&D than they otherwise would have.
• The RDTI generated an estimated $1.83 billion in additional R&D activity.
• For every $1 of government spend, firms invested $1.40 in additional R&D, in line with OECD benchmarks.
• Additional business R&D stimulated by the RDTI was estimated to have increased New Zealand’s GDP by $6.77 billion (this being the mid-point of a range estimate), about 4.2 times the Government’s investment.
• Businesses have strengthened their R&D capability and expanded their activities, with the incentive enabling them to scale up projects, undertake more exploratory research, and attract skilled talent to build their teams.

2020 Implementation review

In 2020, MBIE commissioned an independent review of the early implementation of the scheme to identify how it was working so far and whether any parts of the process could be improved. The review comprised interviews with a range of stakeholders and focused on the experience of businesses and their advisors through the application process for the RDTI.

The Taxation Act 2019

The Act which introduced the Tax Incentive was passed into law in early May 2019. The following related documents track the progress of the legislation through Parliament and the policy development process:

The Taxation (Research and Development Tax Credits) Bill(external link) — Parliament website

Commentary on the Taxation (R&D Tax Credits) Bill [PDF 851KB](external link)

Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill(external link) — Legislation website

Other policy and briefing documents