The R&D Tax Incentive (RDTI) is one of New Zealand’s most powerful tools for driving innovation. Designed to encourage businesses to invest in research and development, it offers a 15% tax credit on eligible R&D activity – helping Kiwi companies push boundaries and build the future.
And it’s working. A recent five-year evaluation found that the RDTI has already made a measurable impact, stimulating additional R&D that’s expected to boost New Zealand’s GDP by an estimated $6.77 billion – a strong signal that the scheme is delivering on its promise.
While the scheme has got off to a strong start, awareness of the RDTI is still relatively low – and many businesses remain unsure about how it works, what qualifies, or whether they’re even eligible.
That’s where this article comes in. We’ve answered the most common questions businesses have about the RDTI: helping you understand how it works, who can access it, and why it’s worth exploring.
Let’s dive in.
Overview of the R&D Tax Incentive (RDTI) in NZ
What is the R&D Tax Incentive (RDTI)?
The RDTI is a government programme that helps New Zealand businesses invest in innovation. It offers a 15% tax credit on eligible R&D expenditure.
The incentive is designed to support businesses developing new or improved products, processes, or services – especially those solving scientific or technological problems in a systematic way.
In short – the RDTI helps reduce the cost of innovation and makes it easier for Kiwi businesses to grow through R&D.
Is the RDTI a tax credit?
Yes – but unlike many tax credits, the RDTI is often paid out in cash.
That means most businesses receive the credit as a cash payment, rather than using it to offset tax. For example – if you spend $1,000,000 on eligible R&D within a financial year, you could receive $150,000 back.
How much can you claim under the RDTI?
You can claim 15% of your eligible R&D expenditure.
There’s a minimum spend threshold of $50,000 per year – unless you work with an approved R&D provider. At the upper end, there’s a maximum cap of $120 million, unless you apply for special approval.
In simple terms – the more you invest in qualifying R&D, the more you can claim back.
Can I claim the RDTI every year?
Yes – if your business meets the criteria, you can claim the RDTI each financial year.
The claim is made retrospectively – for R&D work and spending that took place during the previous financial year. So, each year, you claim costs associated with the R&D for activities you’ve already completed.
What is the purpose of the RDTI?
The RDTI is designed to make innovation more accessible – by reducing the financial risk of investing in R&D.
It aims to support businesses developing new or improved products, processes, or services – especially those tackling scientific or technological challenges.
Ultimately, the goal is to help more Kiwi businesses innovate, grow, and contribute to New Zealand’s long-term economic development.
R&D Tax Incentive (RDTI) Eligibility
Am I eligible for the RDTI?
To be eligible for the RDTI, your business must:
- Be tax resident in New Zealand
- Be performing eligible R&D activities in NZ
- Spend at least $50,000 per year on eligible R&D
- Keep clear records of your R&D work and costs
- Either own the intellectual property (IP) resulting from the R&D – or have the right to use it freely and without restriction
Eligibility isn’t based on industry – it’s based on the nature of the activity. If your R&D aims to solve scientific or technological problems in a systematic way, you may qualify.
What types of businesses can claim the RDTI?
Any New Zealand–based business can potentially claim the RDTI – regardless of size, sector, or structure.
You can be a startup, a large corporate, or anything in between. What matters is what you’re doing, not who you are. If your business carries out eligible R&D activity and meets the criteria, you may be able to claim.
What counts as an eligible R&D activity?
Eligible R&D activities must aim to resolve a scientific or technological uncertainty – something you can’t easily figure out using existing knowledge.
It also needs to follow a systematic approach – with steps like planning, testing, and evaluation.
Typical examples include:
- Developing new products, materials, or processes
- Improving existing technology in a novel way
- Integrating different systems or technologies to create a new solution
- Running experiments to solve technical challenges
- Creating prototypes or models to test ideas
Routine work, marketing, or business process changes generally don’t qualify. It’s about pushing boundaries – not just making improvements.
Want to dive deeper? Read our guide to RDTI eligibility to find out if your R&D qualifies.
What costs can be claimed?
You can claim the direct costs of carrying out eligible R&D.
These often include:
- Employee time spent on R&D
- Materials and consumables used in experiments
- Depreciation of equipment used in R&D
- Prototype costs
- Software or tools required for development
- Contractor or consultant fees (if directly related to R&D)
Some costs – like admin, marketing, or unrelated overheads – can’t be claimed. The focus is on expenses that directly support your R&D activity.
Can I claim overseas expenditure?
Yes – but only in limited cases.
You can claim some overseas R&D costs, but only if they directly support eligible R&D done in New Zealand. These costs must also meet strict conditions and can’t exceed 10% of your total eligible expenditure, unless special approval is granted.
Can I claim R&D done for a client?
This is a common question – and one that often causes confusion. Whether you can claim depends on who owns the intellectual property (IP) and who controls the R&D.
If your business retains the IP and takes on the financial risk of the R&D work, you may be eligible – even if a client benefits from the outcome. However, if the client owns the IP and directs the work under contract, they may be the one entitled to claim.
The key factors are ownership, risk, and control of the R&D activity.
Can startups claim the RDTI?
Yes – startups can absolutely claim the RDTI.
You don’t need to be profitable to benefit. In most cases, the credit is paid out in cash, making it especially valuable for early-stage businesses investing heavily in product development or innovation.
If your startup is solving technical problems and meeting the eligibility criteria – you could be in a strong position to claim.
What’s the minimum spend required to claim the RDTI?
You generally need to spend at least $50,000 per year on eligible R&D to make a claim.
If your spend is lower than that, you may still qualify – but only if you work with an approved research provider.
The threshold is there to ensure the scheme supports genuine, sustained R&D efforts.
What records do I need to keep?
You’ll need to keep clear, detailed records of both your R&D activities and related costs.
This includes:
- Project plans, technical notes, or experiment logs
- Time tracking or work records showing who did what
- Invoices, receipts, and payroll data
- Documentation showing how the work meets the eligibility criteria
For first-time claimants, the record-keeping expectations are more flexible – but you should still aim to show what work was done, why it qualified as R&D, and how the costs were calculated.
Applying for the RDTI
How do I apply for the R&D Tax Incentive in NZ?
The RDTI application process has two key stages:
- Technical – General Approval
You submit details of your R&D activity to MBIE for assessment. This step – known as General Approval – confirms whether your work meets the eligibility criteria. You can apply before or after the R&D is carried out.
- Financial – Supplementary Return
Once your activities are approved, you file a Supplementary Return with Inland Revenue, detailing your eligible R&D expenditure. This happens after the end of the financial year.
Together, these two steps confirm what you did and what you spent – both of which are required to receive the RDTI.
What are the application deadlines?
There are two main deadlines to keep in mind:
- General Approval: Due 3 months after the end of your financial year – for example, if your balance date is 31 March, your application must be submitted by 30 June.
- Supplementary Return: Due 30 days after you file your income tax return.
How long does the RDTI application process take?
Timelines can vary – but as a general guide:
- General Approval can take 4 to 8 weeks to process, depending on the complexity of your R&D and the volume of applications.
- The Supplementary Return is submitted through Inland Revenue and is usually processed along with your tax return.
Applying early and keeping your documentation clear can help speed things up.
How does the RDTI affect my tax return?
The RDTI is a separate process from your regular income tax return – but the two are connected.
You submit an RDTI Supplementary Return through Inland Revenue, alongside (or shortly after) your income tax return. This is where you claim your approved R&D expenditure.
While it’s part of the broader tax process, the RDTI is treated as a distinct credit – with its own rules, eligibility, and approval pathway.
Why work with Swell to access the RDTI?
At Swell, the R&D Tax Incentive isn’t just something we offer – it’s our speciality. We know this scheme inside and out – and help innovative New Zealand businesses access it with clarity and confidence.
The RDTI application process is detailed and time-consuming. It requires technical understanding, precise documentation, and careful coordination with both MBIE and Inland Revenue. That’s where we come in.
We manage the entire process end-to-end – from identifying eligible R&D, preparing and submitting applications, to liaising directly with government agencies. Our high-touch model takes the admin off your plate, so you can stay focused on doing what you do best: innovating.
Our team brings together deep technological, scientific, financial, and commercial expertise – with decades of combined experience in R&D and innovation funding. We take the time to dive deep into your business and understand the work you're doing. This ensures your claim is not only compliant, but complete – capturing the full extent of the R&D you’re entitled to claim.
Whether you’re claiming for the first time or looking to improve your current approach, Swell helps you unlock the full value of the RDTI.
Ready to explore your RDTI eligibility?
If you’re keen to learn more – or want expert support to navigate the RDTI process – we’d love to help.
Get in touch with the Swell team to explore your eligibility and see how we can support your claim.