RESEARCH AND DEVELOPMENT
TAX INCENTIVE
RESEARCH AND DEVELOPMENT TAX INCENTIVE
Key Features
- A credit rate of 15 per cent, a $120 million cap on eligible expenditure, and a minimum R&D expenditure threshold of $50,000 per year.
- A broad set of eligibility criteria and the inclusion of State-Owned Enterprises, industry research cooperatives (including levy bodies) and minority-owned subsidiaries of Crown Research Institutes, Tertiary Education Organisations and District Health Boards.
- A definition of R&D that ensures the credit can be accessed more easily across all sectors, including the technology sector.
R&D TAX INCENTIVE IN YEAR PAYMENTS AVAILABLE
The R&DTI team advise that "In-year payments for the Research & Development Tax Incentive (RDTI) are live and Tax Management New Zealand (TMNZ) is administering loans on behalf of the government. The window for payment requests relating to R&D performed from 1 April 2022 to 31 March 2023 is open. This first payment request window for the scheme will close on 30 June 2023. You will need to submit your payment request to TMNZ by this date, to ensure access to payment for credits from 1 April 2022. How do I submit a payment request? 1 Register for the RDTI in-year payments scheme 2 Apply online for in-year payments by (a) confirming your RDTI details (CAM and/or GA’s). (b) providing your NZBN details for anti-money laundering (AML)/due diligence checks, and (c) signing the Authority to Act form and accepting TMNZ as the ‘other representative’ on your RDTI account. 3 Request payment online – provide expenditure details for the R&D performed in the relevant period. Applications and payment requests can be submitted in a matter of minutes. Due diligence can be completed fully digitally and depends on how much information is needed. This can vary due to the nature of your business, but all loan applicants will need to undergo Anti Money Laundering checks, and allow TMNZ to link with their myIR RDTI account. This allows TMNZ to verify your RDTI approvals. When all application material has been provided TMNZ will verify your information and communicate the outcome within a few days".
The R&DTI team advise that "In-year payments for the Research & Development Tax Incentive (RDTI) are live and Tax Management New Zealand (TMNZ) is administering loans on behalf of the government. The window for payment requests relating to R&D performed from 1 April 2022 to 31 March 2023 is open. This first payment request window for the scheme will close on 30 June 2023. You will need to submit your payment request to TMNZ by this date, to ensure access to payment for credits from 1 April 2022. How do I submit a payment request? 1 Register for the RDTI in-year payments scheme 2 Apply online for in-year payments by (a) confirming your RDTI details (CAM and/or GA’s). (b) providing your NZBN details for anti-money laundering (AML)/due diligence checks, and (c) signing the Authority to Act form and accepting TMNZ as the ‘other representative’ on your RDTI account. 3 Request payment online – provide expenditure details for the R&D performed in the relevant period. Applications and payment requests can be submitted in a matter of minutes. Due diligence can be completed fully digitally and depends on how much information is needed. This can vary due to the nature of your business, but all loan applicants will need to undergo Anti Money Laundering checks, and allow TMNZ to link with their myIR RDTI account. This allows TMNZ to verify your RDTI approvals. When all application material has been provided TMNZ will verify your information and communicate the outcome within a few days".
Business Eligibility
Company eligibility includes some or all of the following conditions:
- A wide range of business structures will be eligible. CRIs, DHBs, and tertiary education organisations, and majority owned subsidiaries will be ineligible. Recipients of Callaghan Innovation Growth Grants (for the same income year) will be ineligible.
- Claimants must be a New Zealand registered entity – with one director resident in NZ.
- Annual R&D spend over $50,000.
- The R&D is conducted on behalf of, and is owned by the claimant.
- Only 10% of the value of R&D conducted offshore is eligible.
- Companies must have evidential records to support their claims.
- Starting in the second year of the tax incentive (the 2021 income year) businesses will be required to receive approval of their R&D activity in the year in which they are conducting it. This approval will be binding on Inland Revenue and will mean that firms have confidence that their activity meets the test of being R&D.
- On-line filing with the IRD through the government’s Investment Management System (IMS).
R&D Activity Defined
"Core R&D activities must be performed for the purpose of acquiring new knowledge or creating new or improved processes, services or goods and must seek to resolve scientific or technological uncertainty. The requirement to use scientific methods has been replaced with a requirement to use a systematic approach.
The test for ‘scientific or technological uncertainty’ will be the competent professional test. If the information to resolve the scientific or technological uncertainty is publicly available or could be deduced by a competent professional in that field, then the activities do not meet the definition of R&D. If a competent professional is unable to tell a business whether it is possible to achieve the desired result without a series of tests or analysis or building a prototype, to resolve the uncertainty, then there may be R&D that meets the definition.
The test for ‘scientific or technological uncertainty’ will be the competent professional test. If the information to resolve the scientific or technological uncertainty is publicly available or could be deduced by a competent professional in that field, then the activities do not meet the definition of R&D. If a competent professional is unable to tell a business whether it is possible to achieve the desired result without a series of tests or analysis or building a prototype, to resolve the uncertainty, then there may be R&D that meets the definition.
R&D Eligible Expenditure
Eligible expenditure includes a broad range of actual R&D costs, for example:
- Salary and wages of employees doing R&D;
- Depreciation on assets used in the R&D;
- The costs of consumables used in the R&D; and
- Overheads.
The accounting treatment of expenditure will not determine eligibility. R&D expenditure that is capitalised and that will form part of the cost base of a depreciable, tangible asset, will not be eligible".
The General Approval Process
To be eligible to claim the tax incentive applicants must first submit, and have approved, a General Approval application for each planned R&D project. Our services include advice, templates, and documentation for drafting and submitting General Approval applications to the IRD. Our General Approval templates define the data inputs required for the Supplemenary Return which is filed at year end.
IRD's advise about the General Approval application is “After you have checked that you are enrolled for the RDTI in myIR, the first step is to submit an application for general approval (or GA) of your R&D activities. Applying for in-year general approval is free, and it is intended to provide you with certainty that your R&D activities are eligible for the RDTI. This part of the claim process is focussed solely on your R&D activities. You can submit a general approval application in anticipation of planned R&D activities or in respect of R&D activities that you have already undertaken during the income year”. You can submit multiple general approval applications during the year. If your R&D programme pivots during the year, you can submit another application for approval. If you expect that your activities will take longer than a year to complete, you may also apply for general approval for up to a maximum of three years”
A dedicated review team within Callaghan Innovation is working with Inland Revenue to assess all general approval applications. This team makes a recommendation to Inland Revenue on the eligibility of the R&D activities that you are undertaking. It’s important to also note that, for tax privacy reasons, the team assessing your application won’t be your usual Callaghan Innovation contact (if you have one). You must obtain general approval for your R&D activities to be able to claim for the associated expenditure at the end of the income year”.
IRD's advise about the General Approval application is “After you have checked that you are enrolled for the RDTI in myIR, the first step is to submit an application for general approval (or GA) of your R&D activities. Applying for in-year general approval is free, and it is intended to provide you with certainty that your R&D activities are eligible for the RDTI. This part of the claim process is focussed solely on your R&D activities. You can submit a general approval application in anticipation of planned R&D activities or in respect of R&D activities that you have already undertaken during the income year”. You can submit multiple general approval applications during the year. If your R&D programme pivots during the year, you can submit another application for approval. If you expect that your activities will take longer than a year to complete, you may also apply for general approval for up to a maximum of three years”
A dedicated review team within Callaghan Innovation is working with Inland Revenue to assess all general approval applications. This team makes a recommendation to Inland Revenue on the eligibility of the R&D activities that you are undertaking. It’s important to also note that, for tax privacy reasons, the team assessing your application won’t be your usual Callaghan Innovation contact (if you have one). You must obtain general approval for your R&D activities to be able to claim for the associated expenditure at the end of the income year”.
General Approval Filing - Due Dates from 1 April 2025
The application for General Approval can be made at any time during the year. But must be filed by the last day of the 3rd month following the end of your income year. From 1 April 2025, RDTI applicants will be able to file general approval applications by the last day of the 3rd month following the end of their income year (balance date). For example:
Income Year Ending 31 March – R&D Tax Incentive General Approval Due 30 JuneIncome Year Ending 30 June – R&D Tax Incentive General Approval Due 30 SeptemberIncome Year Ending 31 December – R&D Tax Incentive General Approval Due 31 March
Income Year Ending 31 March – R&D Tax Incentive General Approval Due 30 JuneIncome Year Ending 30 June – R&D Tax Incentive General Approval Due 30 SeptemberIncome Year Ending 31 December – R&D Tax Incentive General Approval Due 31 March
IRD encourage applicants to submit applications for general approval as soon as sufficient detail is available.
Claiming the Incentive - The Supplementary Return
IRD advise "You will be required to have a general approval or criteria & methodologies application approved before you will be eligible to claim for an R&D tax credit. You will not be able to file your R&D supplementary return without the approval. You must file an R&D supplementary return within 30 days after your filing due date for the income tax return. The income tax return must also be filed within 1 year of the latest filing due date for your return".
Privacy and the Security of your Intellectual Property
IRD advise “We recognise the privacy and security of R&D information is of the utmost importance. Access to the information you provide about your R&D activity will be restricted to the Inland Revenue and Callaghan Innovation core team directly working on the R&D Tax Incentive”.
OUR R&D TAX INCENTIVE SERVICES
Step 1 Briefing
R&DTI overview briefing services for R&D and finance teams. Covers eligible activity, eligible expenditure, record keeping, the General Approval process, the Supplementary Return process, due dates, and Callaghan Innovation support for applicants.
Step 2 Project Review
R&D project assessment services. Identify R&D projects that meet R&DTI eligibility criteria. R&D project consolidation.
Step 3 Registering for the R&DTI
Guidance on registering for the R&DTI on the claimant’s myIR.
Step 4 Filing General Approval Applications
Guidance in drafting, reviewing, and submitting your General Approval applications. Provision of General Approval application templates.
Step 5 Record Keeping
Assistance and advice on setting up compliant R&DTI record keeping frameworks and systems.
Step 6 Filing the R&DTI Supplementary Return
Assistance and advice on setting up a financial year Supplementary Return template. Advice on consolidating project records into the Supplementary Return reporting period. Advice on due dates.
Obtain your copy of our “Getting Started" Brief
Our “Getting Started" Brief guides you through R&D Tax Incentive rules around eligible actvities and expenditures, record keepng, due dates, and registering for the R&DTI. To make an enquiry ,or arrange a briefing, click on the link below.
Our Experience
In 2008 we assisted the then Ministry of Research, Science and Technology prepare an R&D Tax Credit Guide for business owners, financial advisors and R&D leaders. During that time we also worked with claimants and their tax agents to prepare and claim their R&D tax credits. Since the start of the current regime we have been undertaking claimant orientation briefings, setting up compliant in-house record keeping systems, preparing General Approval applications, managing liaison with Callaghan Innovation reviewers and filing applications on claimant's myIR.
Sources: IRD, MBIE, Callaghan Innovation, EY. R&D Tax Incentive Team, R&D Tax Incentive Hub.
Do you Need Help to Plan your Research and Development Project?
You cannot be approved an R&DTI without a documented and evidence based R&D project plan. Do you need help getting started on your R&D project plan? If so, click on the link below, complete and send the form. We have over 30 years of experience planning and budgeting business R&D projects across a wide range of industry types and industry sectors.
This page was last updated on 1 April 2025