Launched back in 2019, New Zealand’s R&D Tax Incentive (RDTI) was designed to boost business-led innovation by offering a 15% tax credit on eligible R&D activity. Five years on, it’s just undergone its first formal review – an in-depth, independent evaluation of whether the scheme is doing what it set out to do.
The evaluation set out to answer a few big questions: Is the RDTI boosting innovation? Is it accessible and effective for businesses? And is it being run well? After crunching the numbers and hearing from stakeholders across the board, the answer is clear – the RDTI is delivering. It’s encouraging more R&D investment, especially from businesses new to government support. It’s delivering solid returns to the wider economy. And off the back of these results, the report recommends continuing with the scheme – good news for any business looking to invest in innovation with confidence.
Here are our five key takeaways from the review.
1. The RDTI is delivering real results – and it’s here to stay
The headline finding from the evaluation is simple: the RDTI is working.
Over its first five years, the scheme has supported 1,752 businesses and is expected to deliver $1.83 billion in additional R&D expenditure – all driven by the incentive. That translates to a “bang for buck” of 1.4x, meaning for every dollar of tax support, businesses spent $1.40 more on R&D than they otherwise would have.
The report estimates the total economic impact at $6.77 billion, or 4.2 times the cost to government, based on established OECD models of the return from business R&D investment. That’s a strong result by international standards, and one that reinforces the value of the incentive as a long-term lever for innovation.
As the report notes:
“The RDTI is delivering strong additionality and compares favourably to both international benchmarks and New Zealand’s previous Growth Grant scheme.”
Off the back of these findings, the evaluation recommends continuing with the scheme – a clear signal to businesses that the RDTI is a stable, effective part of New Zealand’s innovation landscape.
2. More Kiwi innovators are getting the backing they deserve
One of the most encouraging findings from the evaluation is that the RDTI is reaching a wider range of businesses than ever before. The scheme was designed to be more inclusive than the Growth Grant it replaced – and it’s delivering on that promise.
Since launch, 1,752 businesses have received RDTI support. What’s more, around half of them had never previously accessed government R&D funding – showing that the scheme is drawing in new players and expanding access to innovation support.
This signals a shift towards a fairer, more accessible system – one that gives more Kiwi innovators the backing they need to take bold steps forward.
3. A growth loop is emerging – businesses are reinvesting
The evaluation highlights a strong connection between RDTI support and increased R&D investment. On average, businesses receiving the incentive spent an additional $274,000 per year on R&D compared to similar businesses that didn’t claim – a clear sign that the scheme is prompting businesses to go further and invest more.
It doesn’t stop at spending. The report found that RDTI-supported businesses also showed signs of broader growth: 37% made new capital investments, and 26% reported employment growth as a direct result of their R&D activity.
This reflects what we at Swell call the compounding cycle of innovation: businesses invest in innovation, they’re backed by government support, and in turn, they’re able to reinvest with more confidence and ambition.
That said, the report also notes that it’s still early days for fully measuring the RDTI’s impact. The most significant innovation outcomes often take years to unfold – especially in sectors like deep tech, manufacturing or software. That’s why long-term policy stability matters. Businesses need to trust that the support will still be there next year – and the year after – in order to commit fully and unlock the scheme’s full potential.
4. Businesses want policy stability
If innovation is a long game, then policy needs to keep pace. One of the strongest messages from the evaluation is that businesses value consistency in the RDTI – and that ongoing uncertainty or rule changes can limit its effectiveness.
As the report notes:
“Insights from across the spectrum of interviewees provided a strong indication that businesses prefer policy stability… Confidence in stability means firms are better able to plan and make decisions that capitalise on their learning/onboarding of the scheme and the policy intent.”
Frequent changes, the report adds, can lead to more conservative decision-making and reduce both uptake and impact.
For the compounding cycle of innovation to take hold – where businesses continually reinvest in R&D – they need to know the foundations won’t shift beneath them. Long-term certainty isn't a nice-to-have; it’s critical infrastructure for bold, future-focused innovation.
5. Adjustments – not overhauls – are what’s needed next
While the evaluation was largely positive, it also identified areas where the RDTI could be improved. Several technical and operational challenges were flagged – including uncertainty around software eligibility, limitations on overseas R&D, and the compliance burden for some businesses.
Crucially though, the report doesn’t call for major reform. Instead, it recommends a set of targeted refinements aimed at improving the scheme’s clarity and usability – particularly for sectors like tech and early-stage businesses that often face ambiguity.
For Kiwi businesses, this is a reassuring signal. The RDTI’s foundations are sound, and its future looks stable. Any changes ahead are about fine-tuning a working system, not starting from scratch – helping more businesses benefit, with less friction along the way.
Looking ahead
The RDTI is doing what it set out to do – backing Kiwi businesses to invest in innovation. This five-year review confirms it’s delivering impact, expanding access, and worth building on. For businesses already claiming the incentive, it’s a vote of confidence. And for those still weighing it up, it’s a clear signal: the RDTI is here to stay – and now’s the time to make it work for you.
At Swell, we help forward-thinking businesses navigate the RDTI with clarity and confidence. If you're ready to take the next step, we’re here to help.