For Kiwi tech companies, the R&D Tax Incentive (RDTI) is a powerful funding lever – rewarding businesses that push the boundaries of innovation. Providing a 15% tax credit, often paid out in cash, the RDTI delivers non-dilutive funding that can fuel faster product development, help scale your team, and extend your cash runway.
But in the tech sector, the rules come with unique nuances. Determining which activities qualify – and how to present them – can be complex, leading many companies to miss out on funding they are entitled to.
This article demystifies RDTI eligibility for tech/software companies and shows how Swell enables businesses to navigate the process with clarity and confidence.
So, what exactly does eligibility look like – and how does it apply to tech?
RDTI eligibility for tech companies
The R&D Tax Incentive (RDTI) can deliver significant benefits for technology businesses – but in the tech sector, eligibility can be more nuanced. The IRD’s dedicated digital technology guidelines include criteria that go beyond the general rules, reflecting the complexity of software, AI, and hardware–software projects.
In these environments, the line between routine development and genuine R&D can be blurry. A commercially exciting feature release might not qualify at all, while an obscure optimisation in your machine learning pipeline could tick every RDTI box. Understanding where that line is – and how to document your work – is crucial.
Before getting into the nuances that apply specifically to tech companies, it’s worth stepping back to the umbrella RDTI eligibility rules. These are the baseline tests every claim must meet – no matter the sector.
The three principles for RDTI eligibility
- The Objective
You are working toward the creation of a new or improved product, process, or service – or the development of new knowledge. In the tech sector, this often means addressing scalability, reliability, or integration challenges, or overcoming the limitations of existing technologies and development methodologies.
- The Uncertainty
Your work must address a scientific or technological uncertainty – a challenge that cannot be solved with publicly available information or standard techniques. Even a competent professional in the field would need to investigate and experiment to find a solution.
- The Approach
You follow a systematic, structured method for solving the uncertainty. This means your work is organised, planned, and involves formulating and testing possible solutions in a way that generates new knowledge or confirms the best path forward.
The three principles for RDTI eligibility set the foundation - every claim, no matter the sector, must meet them. But in technology, applying these principles can be more complex. Software and digital projects often blur the line between routine development and genuine R&D, which is why the IRD has issued specific guidance for the sector.
With that in mind, let’s look at some key considerations for tech companies preparing an RDTI claim.
Key Considerations for Tech Companies Claiming the RDTI
For technology businesses, RDTI eligibility comes with added complexity. The IRD’s digital technology guidelines highlight that software and tech projects need to be assessed at the technical level — not just in terms of commercial goals. Here are some key considerations if you’re preparing a claim:
1. Focus on the technological challenge
It’s not enough to describe the end product. The IRD wants to understand the underlying technological challenge. For instance, “building a SaaS platform” isn’t R&D in itself — but developing a new algorithm to scale that platform securely and efficiently may be. Similarly, “creating a mobile app” won’t qualify, but engineering a new method for secure data transfer over unstable networks might.
💡 Tip: Focus your claim narrative on the scientific or technological hurdles, not the business outcomes. The ‘what’ is your commercial goal, but the ‘how’ is where eligibility lives.
2. Be clear on the uncertainty you’re tackling
Your project needs to involve genuine scientific or technological uncertainty, not just project risk. In practice, this means demonstrating that the knowledge required to solve your problem isn’t publicly available and couldn’t be easily deduced by a competent professional. For example, figuring out the most efficient image compression method for low-bandwidth conditions may qualify, whereas integrating an existing API will not.
💡 Tip: Benchmark against known solutions and explain why they don’t work for your case. This shows the uncertainty is real, not routine.
3. Separate routine development from true R&D
Routine activities like feature rollouts, UI improvements, bug fixes, or migrating to a new framework generally won’t qualify, even though they take time and skill. What the RDTI recognises are the hidden, technically challenging tasks: refining a machine learning model to work with messy data, optimising hardware–software integration to meet extreme performance requirements or building an entirely new process where no standard solution exists.
💡 Tip: Look beyond the shiny front-end outputs. Often, the qualifying R&D happens deep in the background where your team is solving the hardest technical problems.
4. Client Work: When You Can (and Can’t) Claim It
If you’re a tech company building innovative solutions for clients, you may still be able to claim the R&D through the RDTI. But it's important to identify who owns the R&D.
To identify this, there are a few factors to consider:
- Contract type – Are you contracted to perform R&D on behalf of the client, or to deliver an outcome (e.g. a product or process)? If it’s an outcome, you’re likely the claimant.
- Control – Do you control the R&D activity (e.g. start, stop, or change direction), not just day-to-day tasks? You will need to justify this in order to make a claim.
- Ownership – Do you own, or have the right to use at no further cost, the R&D results? This will need to be satisfied.
- Financial risk – Do you only get paid if the R&D outcome is successful or accepted? If so, you likely bear the risk.
If you control and own from the R&D, you’re usually the claimant. If the client retains these, you’re an R&D contractor.
This is complex and should be discussed with an expert to identify who is the eligible claimant.
💡 Tip: Clarify ownership of IP and financial risk in your contracts. If you want to claim the R&D, ensure your agreements reflect that you – not your client – are eligible to submit a claim.
5. Claiming Contractor and Overseas Developer Costs
Many Kiwi tech companies rely on a mix of local contractors and overseas development teams to deliver projects. The RDTI allows you to claim onshore contractor costs in full when they relate to eligible R&D activities.
For overseas contractors or developers, you can also claim some of their costs, but there’s a cap - generally up to 10% of your total eligible R&D spend – and there are restrictions on what type of R&D can be performed overseas. This ensures the incentive primarily supports New Zealand-based innovation, while recognising that some functions may need to be carried out internationally.
💡 Tip: Keep clear records of contractor agreements, invoices, and the specific R&D activities performed. This strengthens your claim and ensures overseas costs are correctly accounted for.
By keeping these considerations in mind, tech companies can position their RDTI claims more effectively and avoid the common pitfalls that lead to rejections. The next section explores how to maximise your claim by identifying all eligible activities and structuring your application for success.
How Swell Helps Tech Companies Navigate the RDTI
Understanding the RDTI rules is one thing – applying them to complex software and technology projects is another. That’s where Swell comes in.
We specialise in translating innovation into successful RDTI claims. Our team combines deep technical understanding with compliance expertise, helping tech companies:
- Translate technical work into RDTI language – we take complex software and engineering projects and frame them against the RDTI’s eligibility criteria, ensuring your claim clearly demonstrates the scientific or technological challenges involved.
- Identify all eligible activities – capturing both core R&D and the supporting activities that contribute to solving scientific or technological uncertainty, so you don’t leave valuable funding on the table.
- Do the heavy lifting – we handle the full claim application process, compliance, and communications with IRD, so your team doesn’t need to spend time trying to interpret complex tax legislation.
Case Studies: Helping Kiwi Tech Companies Access the RDTI with Confidence
Quashed – How Swell Helped Quashed Unlock R&D Tax Credits and Boost Cash Flow
Quashed, a fast-growing Kiwi insurance-tech platform, partnered with Swell to unlock crucial non-dilutive funding through the RDTI and R&D Loss Tax Credit. With our guidance, Quashed strengthened its cash flow during a challenging capital-raising environment, allowing the team to keep scaling toward their ambitious growth targets.
💬 “Working with Swell was a game-changer for us. The cash flow boost we got from those tax credits? Huge! It’s allowed us to keep growing at an important time in the business—definitely kept us on track with our big plans.” – Justin Lim, CEO, Quashed
👉 Read the full Quashed case study
Case Study: Easy Crypto – Turning Obstacles into Opportunities
Easy Crypto, one of New Zealand’s leading cryptocurrency platforms, knew the RDTI could help fuel their innovation but found the process daunting. By teaming up with Swell, they identified eligible activities, navigated the complexity with ease, and unlocked financial resources that had previously been out of reach. The funding was reinvested directly into driving further innovation and market growth.
💬 “Swell really knows their stuff when it comes to innovation funding. They took what felt like a total headache and made it easy to navigate.” – Anna Walmsley, COO, Easy Crypto
👉 Read the full Easy Crypto case study
Unlocking RDTI for Tech Companies
The R&D Tax Incentive (RDTI) can be a powerful tool for Kiwi tech companies – delivering non-dilutive funding that extends cash runway, supports scaling, and fuels innovation. But in the technology sector, eligibility can be nuanced, and the difference between a successful claim and a missed opportunity often comes down to how projects are interpreted and presented.
With the right partner, navigating the RDTI doesn’t need to be complicated. Swell has the expertise to translate your technical challenges into clear, compliant claims – helping you secure the funding you’re entitled to while keeping your focus on building and growing your business.
📩 Want to know if your projects qualify? Get in touch with the Swell team today to discuss your eligibility.