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Ngā hua tāke mō te rangahau me te whakawhanake About research and development tax incentive credits

Research and Development
Research and Development
  • Research and development tax incentive
    • About research and development tax incentive credits
    • Eligibility for the research and development tax incentive
    • Claiming tax credits
    • Research and development tax incentive due dates
    • Contractors, certifiers, approved research providers, and RDTI credit recipients

What a tax credit is

The research and development tax incentive (RDTI) offers a tax credit at the rate of 15% of eligible R&D eligible expenditure or loss up to $120 million. It operates by offsetting tax to pay and in some circumstances it is refundable.

To claim the tax incentive, you must spend at least $50,000 a year on eligible R&D. You might be eligible if you spend less than $50,000 and use an approved research provider.

Reading our RDTI guides will help you to choose the right process and submit accurate information to support your applications.

Research and Development Tax Incentive: Guidance IR1240 2023 (PDF 2MB) Download guide
Research and development supplementary return guide IR1060 2022 (PDF 207KB) Download guide


Receiving your R&D tax credit

When applying tax credits against your income tax liability, your R&D tax credits apply after imputation credits but before refundable tax credits. Your tax credits are used in the following order:

  1. Non-refundable tax credits
  2. Tax credits for supplementary dividends
  3. Imputation credits
  4. R&D tax credits from a previous tax year
  5. R&D tax credits from the current tax year
  6. Refundable tax credits

Any R&D tax credits that are leftover can be carried into your next income year.

If you are a company, you may only carry your R&D tax credits forward if you meet the shareholder continuity requirements.

R&D tax incentive guidance: receiving your tax credit (govt.loomio.nz)

Getting a refund 

The Government has brought forward the proposed changes to refundability rules. You can now apply these new rules to R&D claims for year 1 of these changes, the 2019-20 tax year.

Limited refundability rules

If you're a company doing eligible R&D, you may be able to get an R&D tax credit refund of up to $255,000. This equals $1.7 million of eligible R&D expenditure if you:

  • are in a tax loss position
  • are in a tax paying position but have surplus tax credits
  • satisfy the R&D tax loss cash-out corporate eligibility and wage intensity criteria
  • do not derive exempt income and are not associated with anyone who derives exempt income.
Exempt income you're allowed

If you're a company resident in New Zealand, you and the associated person are allowed to derive income from dividends, and still be eligible for a refund, if they are from:

  • foreign companies
  • New Zealand wholly-owned groups.

You'll need to check sections CW 9 and CW 10 of the Income Tax Act 2007 for the full criteria.

Income Tax Act - Subpart CW - Exempt income (Parliamentary Counsel Office)

Broader refundability rules

The broader refundability rules apply by default to all claimants in the 2019-20 income year. However, businesses have the option of using the limited refundability rules of year 1 if they prefer.

The broader refundability rules carry forward the previous criteria, but do not include the:

  • R&D wage intensity method
  • $255,000 cap, replacing it with one based on labour-related costs.

Filing an R&D supplementary return

When filing an R&D supplementary return, we will ask the business to confirm which set of refundability rules they're applying to its claim. For more information, see our Research and Development Tax Incentive: Guidance - IR1240 and Research and development supplementary return guide - IR1060.

Refundability rules for 2020-21 onwards

All businesses will have to use the broader refundability rules from the 2020-21 income year onwards.

R&D tax incentive guidance: refunding tax credits (govt.loomio.nz) 

Wage intensity criteria

You must also satisfy the wage intensity criteria In order to satisfy this criteria, 20% or more of your labour costs must relate to R&D. If you are part of a group of companies, the wage intensity amount calculated for your group must be at least 20%.

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