What is R&D and why do it?

R&D allows businesses to explore new ways to create competitive advantage - and can produce a range of results including new systems and processes, or innovations in products and technology.

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What is R&D?

R&D is about exploring the unknown - it aims to discover something new or solve unanswered questions. For a business to qualify for the RDTI, it must perform R&D activity which meets all the following requirements:

  • Occurs in New Zealand
  • Seeks to resolve scientific or technological uncertainty
  • Follows a systematic approach
  • Seeks to create new knowledge, or new or improved processes, services or goods

If all are met, the activity qualifies as “core research and development”. Further details about each of these requirements can be found in “What R&D activities are eligible for the RDTI?”

Examples of eligible R&D that may (if the tests above are met) qualify for the RDTI include research into artificial intelligence and data science, industrial manufacturing automation, optimising production processes through technology, new product design using science and technology, or the creation of new IP through cutting edge software and tools.

Why do R&D?

There are compelling reasons for businesses to consider doing more R&D:

  • R&D is a good investment. A 2017 review of economic studies around the world found the long-term payback on R&D spend is in the order of 20% a year.
  • New Zealand Productivity Commission research (2017) showed firms that adopt an ‘all-of-firm innovation mindset’ and focus on continually improving their internal processes and structures while also innovating through R&D, get exponentially better productivity outcomes than those that innovate in just one area.
  • While there is no guaranteed return on investment (ROI) for a business that spends money on R&D, the RDTI can now help eligible businesses to mitigate some of this risk by reducing their income tax bill.

A business case for investing in R&D can be found in our News and Insights section. It provides further evidence that R&D creates opportunities for your business to gain a competitive advantage, helping it grow.

Government funding for research & development (R&D)Government funding for research & development (R&D)

R&D Tax Incentive

How can I get help with the costs of my R&D programme?

Getting Started Grants

Is there funding for my business to start doing R&D?

Project Grant

Is there funding to help my business expand its R&D?

R&D loss tax credit

Can my R&D tax losses be refunded?

Student Grants

Is there funding to get short-term, skilled staff for my R&D project?
How can I access funded expertise to help with a challenging research project?
I want to add a highly skilled graduate to my R&D team, is there funding to assist?
a credit rate of 15%a $120 million expenditure capa minimum R&D expenditure of $50k per year (or less with an approved research provider)
Occur in New ZealandSeek to resolve scientific or technological uncertaintyFollow a systematic approachSeek to create new knowledge, or new or improved processes, services or goods
1. enrol with Inland Revenue on myIR. 2.keep appropriate records of your eligible R&D activity and expenditure as set out in the record keeping section. 3.make a judgement (self-assessment) that your business is an eligible entity with eligible R&D activity and eligible expenditure . 4.complete an R&D supplementary return. 5.	file your income tax return, making sure you complete the R&D tax credit field.1. enrol with Inland Revenue on myIR. 2.keep appropriate records of your eligible R&D activity and expenditure as set out in the record keeping section. 3.make a judgement (self-assessment) that your business is an eligible entity with eligible R&D activity and eligible expenditure . 4.complete an R&D supplementary return. 5.	file your income tax return, making sure you complete the R&D tax credit field.