Research and development tax incentive

The Government has committed to raising New Zealand’s research and development (R&D) expenditure to 2% of GDP over 10 years.

To reach this target more businesses will need to increase their expenditure on R&D. This will be supported through an R&D tax incentive.

We listened to you and produced a user-friendly, fit-for-purpose scheme that will support a wide range of businesses to undertake more R&D.

Main 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
  • a limited form of refunds for the first year of the scheme that will mirror the R&D tax-loss cash-out scheme run by Inland Revenue. A more comprehensive policy will be in place for the second year of the scheme
  • a definition of R&D that ensures the credit can be accessed more easily across all sectors, including the technology sector
  • the inclusion of state-owned enterprises, industry research cooperatives, levy bodies, and minority-owned subsidiaries of select Crown entities.

When the tax credit will apply

The 15% tax credit will be available from the beginning of a business's 2019/20 income year.

R&D Tax Incentive summary flyer [PDF, 91 KB]

The Taxation (Research and Development Tax Credits) Bill

The Bill to introduce the R&D tax incentive has been introduced to Parliament. Read the following related documents:

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

Regulatory Impact Statement [PDF, 161 KB] 

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

Policy changes from the discussion document

Read how the proposed policies changed following feedback [PDF, 326 KB]

Briefing documents for download

Cover note for release of R&D tax incentive briefings 14 June – 29 August 2018 [PDF, 216 KB] 

Approach to the R&D tax incentive bill (redacted)  [PDF, 72 KB]

R&D Tax Incentive - Summary of Submissions (redacted)  [PDF, 1.5 MB]

Report on UK and Norway R&D Tax Credit Schemes (redacted) [PDF, 180 KB] 

R&D tax incentive for implementation (redacted) [PDF, 113 KB] 

R&D Tax Incentive Support for loss-making firms and transition arrangements (redacted)  [PDF, 123 KB]

Cabinet paper R&D tax incentive for implementation (redacted) [PDF, 113 KB] 

Options to expedite transition of Growth Grant customers to R&D Tax Incentive (redacted) [PDF, 107 KB] 

R&D Tax Incentive Extensions to Growth Grant contracts (redacted)  [PDF, 74 KB]

Cabinet Paper R&D tax incentive for implementation (redacted)  [PDF, 328 KB]

Science and Innovation Briefings on the R&D Tax Incentive, 2 November 2017 – 15 May 2018 (redacted) [PDF, 6.9 MB] 

Submissions received

View the submissions for the R&D Tax Incentive consultation.