How do I prepare to claim the RDTI?
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Record-keeping requirements
The RDTI operates on a self-assessment basis. You’re responsible for determining whether your activities and expenditure meet the legislation’s requirements, and for maintaining records to support your claim.
What records should be maintained?
Your business records must be sufficient to verify:
- The nature of the R&D activities
- The amount of money spent on R&D activities
- The relationship between the expenditure and the R&D activities.
Relevant records include those normally kept by businesses to support income tax and GST claims. Additional records will be required to cover the planning and processes of your R&D, and to isolate eligible expenditure. These records will vary depending on the nature of your business and R&D activities.
Records of eligible activities
Your records should establish that you meet all the eligible activity requirements. Ideally you should maintain a project summary document for each core R&D activity that summarises:
- The new or improved knowledge, product, process or service sought
- The scientific or technological uncertainty or uncertainties that needed to be resolved
- The state of knowledge or technology that existed when the R&D was undertaken
- Evidence that the knowledge was not publicly available or deducible by a competent professional – this might include:
- Literature reviews
- Patent or other searches
- Scientific or technological reviews and articles
- Reports or opinions from experts
- Trade journal articles - Evidence of the systematic approach to the R&D, such as project plans and records of testing and outcomes
- When the core activity commenced and ceased
- How your supporting activities relate to the core activity
- How you identify costs that relate to the eligible activity.
Records of eligible expenditure
You already keep records of your income and expenditure (eg. contracts, invoices, wage records) in your accounting systems and financial statements. However, your existing expense classifications won’t necessarily match up with the definitions of eligible and ineligible expenditure. You’ll need to develop additional systems that make it clear which is eligible.
Apportionment
If your employees, business assets and other resources are used in both R&D and other activities, you will need to apportion the expenditure between those activities.
There are many ways of doing this, and you must use a method or methods that can be substantiated. This could include the use of time records for employees, floor space for rent, and hours of use for plant and equipment.
Whichever method you use, you should be able to show why it is appropriate.
Commercial production
If you perform your R&D activity in conjunction with a commercial production activity (producing products or services for sale), you can only claim the RDTI on:
- expenditure on your employees’ contribution to the R&D activity, and
- the additional expenditure you incur because of the R&D activity.
This means you have to keep records to substantiate the time and costs for employees working on the R&D activity, and any additional costs incurred.
Feedstock rule
Where any goods produced as a result of the R&D activities are sold, you must deduct the sale price or market value of the goods from your eligible expenditure. You will need to keep records of the production costs, volume and value of goods produced and sold, and the volume on hand at the end of the year.
Contractors
If you engage a contractor to carry out your R&D activity, any contracts, reports and invoices should enable you to:
- Identify the eligible R&D activities performed by the contractor and describe them as required by the R&D return (and from 2020/2021 the application for general approval)
- Identify the cost of the eligible R&D activity and exclude expenditure on any other work carried out
- Identify and exclude any ineligible expenditure incurred by the contractor
- Identify when and where the contracted R&D was undertaken.
For detailed information on record-keeping to support your RDTI claim, download our Keep Good R&D records How-To Guide.


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.








