Why aren’t contractors eligible for the RDTI?

The RDTI’s aim is to increase the amount of R&D undertaken in New Zealand, and it does this by rewarding the entity making the decisions about investing in R&D.

Because contractors generally act as an agent for the decision-making entity, contractors themselves generally aren't eligible for the RDTI. An exception is when a contractor performs R&D for an offshore business that does not carry on a business through a fixed establishment in New Zealand. In this scenario, the contractor must satisfy the eligible entity criteria in their own right.

Using an approved research provider

Approved research providers are a special kind of R&D contractor provided for in RDTI legislation.

If you’re claiming the RDTI for R&D expenditure below $50k per year, you must use an approved research provider to carry out the R&D. 

Here's a list of approved research providers.

If you spend more than $50k per year on eligible R&D, you may choose to use an approved research provider, but there is no requirement to.

Situations where it’s unclear who has the right to claim

Situations may arise where it is unclear if the contractor is acting as an agent for you, or if they are doing R&D on their own account.

In these situations, who has the right to claim will be determined by the following factors:

  • control - who controls when R&D stops and starts?
  • ownership - who owns (or has the right to use) the results of the R&D?
  • financial risk - who bears the financial risk of the financial activity? (i.e. who has to pay for it, regardless of its result?)