The Research and Development Tax Incentive (RDTI) is a New Zealand government scheme that provides tax credits to businesses investing in research and development activities. It’s designed to encourage innovation and R&D investment across all sectors.
Key Features:
Tax Credit Rate:
- 15% tax credit on eligible R&D expenditure
- Refundable for loss-making companies
- Can offset tax liability for profitable companies
Eligibility:
Business Requirements:
- Must be a New Zealand tax resident company
- Conducting eligible R&D activities in New Zealand
- Minimum spend of $50,000 per year on eligible R&D (raised from previous thresholds)
- Maximum claim of $120 million in eligible expenditure per year
Eligible R&D Activities: Must involve:
- Systematic investigation or experimentation
- Advance in science or technology
- Resolution of scientific or technological uncertainty
- Not be explicitly excluded activities
Eligible Expenditure:
Includes:
- Employee salaries and wages for R&D work
- Contractor costs (with some limitations)
- Materials and consumables used in R&D
- Depreciation on assets used for R&D
- Overheads directly attributable to R&D
Excludes:
- Market research
- Quality control and routine testing
- Arts, humanities, and social sciences research
- Commercial, legal, or administrative work
- Oil and gas exploration
How It Works:
- Self-assess whether your activities qualify as R&D
- Calculate eligible expenditure
- Claim the tax credit in your income tax return
- Receive either a tax offset or cash refund
Administration:
- Managed by Inland Revenue (IR)
- Available from the 2019-20 income year onwards
- Approval-based system – requires application and approval before claiming
- Must apply before the end of the income year in which R&D is conducted
Supplementary Support:
Callaghan Innovation provides:
- Free guidance on eligibility
- R&D capability building programs
- Technical advice and support
- Connections to research partners
Recent Changes:
- Minimum threshold increased to $50,000 (from lower amounts)
- Enhanced scrutiny and compliance requirements
- Focus on genuine R&D activities
Benefits:
- Cash flow improvement for loss-making companies
- Reduced tax liability for profitable companies
- No cap on total claims (up to $120M expenditure)
- Available across all industries
- Complements other government R&D support