R&D Tax Incentive (RDTI): Backing Bold Kiwi Businesses
Bold businesses ideas don’t just happen – they’re built through research and development.
R&D is how new ideas take shape, how industries evolve, and how businesses create a competitive edge. Whether it’s designing a new product, solving a technical challenge, or improving a critical process – R&D is the engine behind innovation.
But it doesn’t come cheap.
Developing something new means stepping into the unknown. It takes time, expertise, experimentation – and a willingness to take risks without guaranteed results.
To help offset some of that cost, and to encourage more New Zealand businesses to keep pushing boundaries, the government introduced the R&D Tax Incentive (RDTI). The RDTI is a 15% tax credit – often refunded as cash – designed to reward businesses for investing in innovation.
Yet despite its value, the RDTI is still widely underused. Many eligible businesses don’t know it exists, aren’t sure how to access it, or place it in the too-hard basket – especially when claims are seen as complex or time-consuming.
In this guide, we break down what the RDTI is, how it works, who’s eligible, and how Swell helps simplify the process – so you can focus on innovation, not admin.
Overview of the R&D Tax Incentive (RDTI)
The R&D Tax Incentive (RDTI) is a government-backed tax credit designed to reward and encourage businesses that invest in research and development. It helps reduce the financial burden of innovation – making it easier for Kiwi companies to explore new ideas, solve complex problems, and bring better products and solutions to market.
Here’s what you need to know:
- Offers a 15 % tax credit – often in the form of cash – on eligible R&D expenditure. For example, if your business spends $1 million on eligible R&D, you could receive a $150,000 tax credit. This can be used to fund further innovation, hire staff, invest in equipment or support your growth.
- Available to businesses across all sectors – from software and manufacturing to agritech, medtech, aerospace and beyond.
- Applies to the process of solving scientific or technical uncertainty – not just the final result. This might involve developing something entirely new, improving an existing product or process, or experimenting to overcome a specific technical challenge. What matters is that you’re tackling uncertainty in a structured, systematic way – something we’ll explore in more detail below.
💡 Did you know? The RDTI isn’t just a tax offset – it’s often refunded in cash. Many businesses assume the RDTI only reduces their tax bill, but in most cases, the credit is paid out as a cash refund, providing real funding to reinvest in your R&D.
A Powerful Tool – Still Underutilised
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Despite its benefits, the RDTI remains underutilised.
We estimate that only around 20 % of eligible Kiwi businesses are currently claiming – meaning thousands of companies are missing out on funding that could be reinvested into growth, hiring, or new product development.
The RDTI was introduced in 2019, replacing Callaghan Innovation’s growth grants. And while it brought New Zealand closer in line with global innovation incentives, we still have ground to make up.
Countries like Australia, the UK and Canada have offered similar tax credits for decades – and their R&D performance shows it. New Zealand’s total R&D spend sits at 1.54 % of GDP, compared to the OECD average of 2.7 %. Business-led R&D sits even lower, at 0.97 % – far below innovation leaders, where business investment often exceeds 2–3 %.
The RDTI is designed to help close this gap – by making it easier and more appealing for businesses to take on ambitious, high-risk R&D work. For New Zealand to stay competitive on the world stage, more Kiwi businesses need to be aware of – and equipped to access – this funding.
Is Your Business Eligible for the RDTI?
The R&D Tax Incentive ultimately comes down to one thing: eligibility. To access the incentive, your work needs to meet a clear set of criteria defined by legislation – but this definition of “R&D” may differ from how you define R&D within your business.
To be eligible, you must meet each of the three following principles:
The Objective
You are working toward the creation of a new or improved product, process, or service – or developing new knowledge.
There are many reasons why you might be conducting R&D. You could be responding to customer needs, improving internal systems, adapting to regulatory changes, or exploring new market opportunities. Whatever the motivation, R&D can take place in a wide range of real-world business activities.
The Uncertainty
Your activity must involve a scientific or technological uncertainty – a challenge that must be resolved to achieve your objective.
There are two key ways uncertainty is identified:
- No existing knowledge – You’ve searched, but no publicly available information or known method exists to solve the challenge you’re facing.
- Professional difficulty – Even a skilled, competent expert in the field can’t solve it using standard knowledge or techniques.
If your team is experimenting, prototyping, or trying different approaches because there’s no clear path forward – that’s a strong indicator of eligible uncertainty.
💡 Client work can still qualify: If you're doing R&D work for a client, you may still be eligible for the RDTI – as long as your business owns the IP and meets the standard eligibility criteria. This is a common area of confusion, especially in sectors such as software & technology.
The Approach
Your method for solving the uncertainty must be systematic – meaning it’s structured, planned, and involves an organised process to develop or test a solution.
A systematic approach is needed when:
- The knowledge isn’t publicly available – There’s no existing answer you can easily apply
- It requires testing – A qualified expert can’t resolve the issue without exploring, trialling, or generating new knowledge
Meeting these three principles is essential to qualifying for the RDTI. While the framework may sound technical, it often applies to real, practical work already happening inside innovative businesses – even if it’s not formally labelled as “R&D.”
The Impact of the RDTI
Yes – the RDTI provides tax relief. But its real purpose is to stimulate innovation and economic growth.
It’s designed to give businesses the confidence to take on ambitious, uncertain work – and the backing to go further with their R&D. When used well, it becomes a strategic tool: one that enables reinvestment in innovation.
But don’t just take our word for it. According to the OECD, every $1 a government provides in R&D tax support typically results in $1.40 of additional business R&D investment. In other words, the RDTI doesn’t just retrospectively reward R&D activity – it actively encourages businesses to do more.
That’s exactly what we see with Kiwi companies using the RDTI effectively:
- They’re reinvesting in innovation – funding new prototypes, pilot projects, or experimental work they might otherwise put off
- They’re hiring and retaining skilled talent – using RDTI credits to support technical teams or bring on new capabilities
- They’re more confident to tackle ambitious, uncertain projects – knowing that if the work meets eligibility criteria, the risk is partially offset
Real-World Impact: Examples of the RDTI Supporting Kiwi Innovation
MARS Bioimaging
MARS Bioimaging is pioneering world-first 3D colour X-ray scanners – a breakthrough in medical imaging technology. As a research-heavy business, accessing the RDTI has been a key enabler of continued innovation.
In FY24, MARS received $535,000 in RDTI and R&D Loss Tax Credit funding, providing critical cashflow to reinvest in technical development, scale their team, and maintain momentum on their product roadmap.
👉 Read the full MARS case study
New Ground™
NewGround Coffee is an innovative New Zealand manufacturer offering full‑service contract manufacturing in formats like Specialty Instant Coffee, Coffee Concentrate, and Coffee in a Can. Their business model is product‑led and highly experimental, developing unique formulations and refining processes to meet quality, flavour, and shelf‑life standards.
By accessing the RDTI, NewGround unlocked $150,000 in tax credits, enabling them to invest more confidently in R&D and accelerate product development. That funding supports faster iteration, deeper technical exploration, and a stronger pipeline of market-ready innovation.
👉 Read the full NewGround Coffee case study
How Swell Helps Businesses Access the RDTI
At Swell, we work with innovative New Zealand companies like MARS Bioimaging and NewGround Coffee to help them access the R&D Tax Incentive.
While the RDTI offers significant value, making a claim can be complex. The eligibility framework is detailed, the technical documentation takes time, and many businesses simply don’t have the internal resources to manage the process on their own.
We specialise in R&D funding – and it’s all we focus on. Our team supports businesses by:
- Doing a deep dive into your business to identify all eligible R&D activities and associated expenditure
- Preparing technically sound applications that clearly reflect the work being done
- Navigating the full process from start to finish, with clarity and structure
By working closely with a wide range of innovative teams, we help ensure that good ideas don’t go unsupported – and that valuable funding isn’t left unclaimed.
If you’re exploring the RDTI and want to understand whether your business could be eligible, we’re here to help. Get in touch for a no-obligation conversation – we’ll help you assess your eligibility and how the incentive can help your business.