Global Daily Tax News, New Zealand Amending Research And Development Tax Incentive, (Jun 1, 2026)

The New Zealand Government has announced plans to enhance the nation's Research and Development Tax Incentive (RDTI).

The changes are intended to improve cashflow for start-ups with in-year payments, provide administrative flexibility, allow mining ...

The New Zealand Government has announced plans to enhance the nation's Research and Development Tax Incentive (RDTI).

The changes are intended to improve cashflow for start-ups with in-year payments, provide administrative flexibility, allow mining research and development businesses to claim similar costs as other industries, and lower the existing cap on internal software spending to NZD3m per year.

Most of these proposed changes would apply from the 2027– income year.

In-year payments

Currently, there can be long delays between when eligible expenditure is incurred and when the tax incentive is verified and paid to the business.

Proposed in-year payments would allow businesses to receive quarterly cash payments throughout the year based on their expected RDTI.

In-year payments would be limited to the amount of labor-related taxes paid by the business, consistent with the current rules for RDTI cash refunds.

Administrative flexibility

A proposed amendment to administrative rules from April 1, 2027, would provide Inland Revenue with discretions to accept late RDTI returns and to amend minor administrative errors in RDTI returns.

This would ensure that businesses are not disadvantaged if they make a small mistake or if events outside their control cause their RDTI returns to be filed late.

Expanding eligible mining research and development expenditure

Currently, mining businesses can only claim the RDTI for labor-related research and development costs and for depreciable tangible assets that are solely used to perform research and development.

The proposed changes would expand the range of research and development expenditure mining businesses can claim under the RDTI, so it is similar to other industries.

Internal software cap

The RDTI cap for claims on internal software expenditure would be lowered from NZD25m to a proposed NZD3m per year.

The Government has said lowering the existing cap for internal software expenditure would improve the cost effectiveness of the RDTI by prioritizing other types of research and development that are more likely to generate new knowledge, technology, and skills that benefit the wider economy.

It said, "Internal software development often involves incremental improvements to internal systems and processes, which are likely to have limited spillover benefits for other businesses and the wider economy. Expenditure on software development for the purpose of internal administration such as payroll or inventory is already ineligible for the RDTI."

Expenditure on software developed for other internal purposes is currently eligible for the RDTI up to a cap of NZD25m of spending. This cap would be reduced to NZD3m from the 2027– income year.

Other types of research and development spending, such as spending to develop external software products that will be sold or licensed to customers, will be unaffected.

Global Daily Tax News, New Zealand Amending Research And Development Tax Incentive, (Jun 1, 2026)

The New Zealand Government has announced plans to enhance the nation's Research and Development Tax Incentive (RDTI).

The changes are intended to improve cashflow for start-ups with in-year payments, provide administrative flexibility, allow mining ...

The New Zealand Government has announced plans to enhance the nation's Research and Development Tax Incentive (RDTI).

Most of these proposed changes would apply from the 2027– income year.

In-year payments

Currently, there can be long delays between when eligible expenditure is incurred and when the tax incentive is verified and paid to the business.

Proposed in-year payments would allow businesses to receive quarterly cash payments throughout the year based on their expected RDTI.

In-year payments would be limited to the amount of labor-related taxes paid by the business, consistent with the current rules for RDTI cash refunds.

Administrative flexibility

A proposed amendment to administrative rules from April 1, 2027, would provide Inland Revenue with discretions to accept late RDTI returns and to amend minor administrative errors in RDTI returns.

This would ensure that businesses are not disadvantaged if they make a small mistake or if events outside their control cause their RDTI returns to be filed late.

Expanding eligible mining research and development expenditure

Currently, mining businesses can only claim the RDTI for labor-related research and development costs and for depreciable tangible assets that are solely used to perform research and development.

The proposed changes would expand the range of research and development expenditure mining businesses can claim under the RDTI, so it is similar to other industries.

Internal software cap

The RDTI cap for claims on internal software expenditure would be lowered from NZD25m to a proposed NZD3m per year.

Expenditure on software developed for other internal purposes is currently eligible for the RDTI up to a cap of NZD25m of spending. This cap would be reduced to NZD3m from the 2027– income year.

Other types of research and development spending, such as spending to develop external software products that will be sold or licensed to customers, will be unaffected.