The Research and Development Tax Incentive (RDTI): how it benefits your business

“Instead of making businesses wait until the end of the tax year, the RDTI is being changed to introduce in-year payments so businesses can get the tax credit sooner. This will support ongoing research activities by removing a key cash flow barrier.”

~ Revenue Minister, Simon Watts

In Budget 2026, the NZ government announced changes to the existing Research and Development Tax Incentive to help Kiwi businesses innovate and preserve cashflow.

What is the Research and Development Tax Incentive (RDTI)?

The Research and Development Tax Incentive (RDTI) is a New Zealand government initiative providing a 15% tax credit on eligible R&D expenditure.

The incentive is designed to encourage innovation and applies to scientific or technological research aimed at creating new knowledge or improved products, processes, and services.

What were the main Budget changes to RDTI?

The 2026 Budget introduced a number of changes to RDTI that should expand the incentive's key benefits for some business owners.

Changes included:

• Introduction of in-year payments: Proposed in-year payments would allow your business to receive quarterly cash payments throughout the year, based on your expected RDTI. This will improve cashflow for innovative start-ups.
• More flexibility around filing and errors: A proposed amendment to administrative rules from 1 April 2027 would provide Inland Revenue with discretion to accept late RDTI returns and to amend minor administrative errors in RDTI returns.
• Expanded mining sector R&D scope: Eligible R&D expenditure rules for mining businesses are expanded, bringing deductible claim categories into closer alignment with other industries and sectors.
• Capped internal software R&D spend: To focus incentives on broader benefits, the annual cap for non-administrative internal-use software development expenditure has dropped from $25 million to $3 million per year.

If you’re developing new products, services or innovations within the scope of the RDTI, making a claim against your R&D overheads could be key to boosting cashflow for the project.

Talk to our team and we’ll help you understand whether your project meets the eligibility criteria.