What R&D activities are eligible for the RDTI?
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What R&D qualifies for the RDTI?
R&D is a fundamental part of growing your business through new innovations. Here are some key definitions to help you understand what qualifies as eligible R&D for the purposes of claiming the RDTI.
At a glance
A core R&D activity must:


R&D Tax Incentive
R&D Tax Incentive (RDTI)
- The RDTI offers a 15% tax credit on eligible R&D expenditure.
- It applies across a wide range of industry sectors and to a number of eligible R&D activities.
- Eligible R&D expenditure between $50,000 and $120 million per year can be claimed (some exceptions apply).
- A limited form of refund ability applies for 2019/2020, mainly for smaller businesses that are R&D intensive and pay little or no income tax. A more comprehensive policy will be in place from 2020/2021.
- The Government will invest $1 billion into the RDTI over the next four years to encourage New Zealand businesses to spend more on R&D.
- The RDTI can be claimed alongside the R&D loss tax credit. It can also be claimed alongside the other R&D funding options listed below, but not for the same expenditure or for required co-funding.
- The RDTI is jointly administered by Inland Revenue and Callaghan Innovation. Visit www.rdti.govt.nz
Getting Started Grants
A Getting Started Grant is for businesses that are early stage or new to R&D.
- It offers up to $5,000 for launching an R&D project and navigating roadblocks to commercialisation.
- It covers 40% of costs for R&D conducted in New Zealand.
- A one-off payment is provided at the end of the project.
- You must be a company, limited partner or Māori incorporation/trust.
- Visit Callaghan Innovation for more.
Project Grant
A Project Grant covers up to 40% of eligible R&D project costs for businesses new to, or expanding, R&D in New Zealand.
- It’s available if you have been performing R&D for less than three years, or have spent less than $800,000 on average each year for the last three years.
- You will receive payment in monthly or quarterly arrears.
- You must be a company, limited partner or Māori incorporation/trust.
- Visit Callaghan Innovation for more.
- NOTE: If you have a Callaghan Innovation Project Grant then you are not able to claim the R&D Tax Incentive (RDTI) on any expenditure relating to the R&D activities funded by the Project Grant. Read the Fact Sheet for Project Grant recipients for further details.
R&D loss tax credit
R&D loss tax credit
- Up to 28% of a business’ tax losses from eligible R&D expenditure may be cashed out (refunded) instead of carrying forward to the next income year.
- A maximum allowable value of $476,000 applies in the 2019/2020 tax year.
- You can claim the R&D loss tax credit with the RDTI for the same expenditure.
- Visit Inland Revenue for more.
Student Grants
An R&D Experience Grant allows you to hire a tertiary student to support your R&D work during their summer break.
- The student must be NZQA level 7-10 in science, technology, engineering, design or business in New Zealand. They must not be employed by the business or have undertaken more than two R&D Experience Grants there before.
- The business receives funding of $8,460 plus GST for 400 hours of full time work.
- It’s available if you have an active R&D programme and are a company, limited partner or Māori incorporation/trust.
- Visit Callaghan Innovation for more.
An R&D Fellowship provides businesses with advanced research at PhD or Masters level to help solve an R&D problem.
- The research is undertaken on site at both the business and the student’s university, and is jointly supervised.
- Students receive a stipend (maximum $26,000 p.a.) and a fee (of $4,500 p.a.) is paid to the university to support their hosting role.
- Funding is for research activity only, for a maximum of three years for PhD students and two years for Masters students.
- The student must be enrolled at research Masters or PhD level in science, technology, engineering, design or business in New Zealand.
- It’s available to businesses that have an active R&D programme. The business must be a company, limited partner or Māori incorporation/trust.
- Visit Callaghan Innovation for more.
An R&D Career Grant provides funding for an internship. It allows a PhD or Masters graduate to gain six months experience helping solve an R&D problem.
- The business receives funding for the first six months of the student’s annual salary up to $30,000 for a Masters graduate and up to $35,000 for a PhD graduate.
- The student must be about to complete, or have completed, a degree in science, technology, engineering, design or business in New Zealand.
- They must have completed their course of study less than 12 months ago and cannot already be employed in the industry.
- You must have an active R&D programme and be a company, limited partner or Māori incorporation/trust.
- Visit Callaghan Innovation for more.









Scientific and technological uncertainty
R&D is about exploring the unknown. Scientific or technological uncertainty is a gap in the available scientific or technological knowledge. That means when a competent professional, with access to publicly available information, doesn’t know if something is achievable.
If your team would have to use a systematic approach to discover that knowledge and bridge the gap (for example through testing, experimentation or prototyping) your activity could qualify for the RDTI. Your R&D doesn't have to be successful - even if you fail, you could be eligible for the RDTI.
Systematic approach
A systematic approach is a methodical process to find possible solutions to an uncertainty. The solution is the idea, proposal or hypothesis that is being investigated using the systematic approach. This is intended to disqualify accidental discoveries. The test for a systematic approach in research contexts is whether the methodology is sufficiently structured and documented that it can be reproduced.
New or improved knowledge or things
If your R&D is seeking to create new knowledge, or new or improved products, processes or services, it could be eligible for the RDTI. The test of new is on a worldwide basis - it must be new to the world, not merely new to your business or to New Zealand.
It is not a requirement that the R&D is successful. Unsuccessful R&D also increases knowledge and activities that are unsuccessful can qualify.
Supporting activities
You can also include activities performed in support of your core activities in your claim. To be eligible, a supporting activity must:
- support the core R&D activity as its only or main purpose, and
- be required for, and integral to, the core R&D activity.
Supporting activities can be performed before, during, or after a core activity. However, if you perform a supporting activity before you start a core activity, and don't end up doing the core activity, you can't claim the credit for your supporting activity.
Ineligible activities
A number of activities are excluded as core R&D, but may be eligible as supporting activities:
- Research in social science, arts, or humanities
- Quality control, routine testing, routine collection of information and routine operations on data
- Reverse engineering a commercial product or process from an existing product or system or from plans, blueprints, detailed specifications, or publicly available information
- Data mapping and data migration testing
- Bug testing, beta testing, system requirement testing, user acceptance testing, and data integrity testing
- Minor adaptions, cosmetic or stylistic changes or improvements, including to software
- Testing or comparing the efficiency of algorithms already known to work
- Testing security protocols or arrangements
- Converting existing systems to, or integrating existing systems with, new software platforms.
The following are excluded as both core and supporting activities:
- Pre-production activities, including demonstration of commercial viability and tooling up
- Routine de-bugging of existing computer software
- Supporting or making minor improvements to existing computer software, using known methods
- Routine software and computer maintenance
- Prospecting for, exploring for, or drilling for minerals, petroleum, natural gas, or geothermal energy
- Market research, market testing, market development, or sales promotion, including consumer surveys
- Commercial, legal, or administrative aspects of patenting, licensing, or similar activities
- Activities involved in complying with statutory requirements or standards for pre-existing processes, services, or goods
- Management studies
- Activities relating to organisational design
- Ineligible internal software development.
Activities are excluded for several reasons, including:
- to clarify that the activity does not amount to R&D because the knowledge required is publicly available or can be deduced by a competent professional,
- to clarify that it does not amount to R&D because it occurs before any scientific or technological uncertainty is identified or after it has been resolved, or because there are inadequate spill-over benefits from the activity.
Refer to the detailed RDTI guide (page 51) for more information on excluded activities.