Tax incentives/rebates advisory in New Zealand.

New Zealand offers two main tax incentive schemes for businesses investing in research and development: the R&D Tax Incentive (RDTI) and the R&D Loss Tax Credit (RDLTC). The RDTI provides a 15% tax credit on eligible R&D expenditure and is available to most businesses that meet the activity and expenditure thresholds. The RDLTC is aimed at early-stage or loss-making companies and provides a cash credit at 28% of eligible R&D losses, giving businesses access to funding before they become profitable, subject to a cap of NZD 5 million per annum.

Both schemes are administered jointly by Inland Revenue and Callaghan Innovation and require annual registration and detailed activity documentation. For a full overview of eligibility criteria and the claims process, see the guide to R&D tax incentives in New Zealand.

Eligible R&D activity must involve systematic work aimed at resolving scientific or technological uncertainty that cannot be resolved by a competent professional in the field. This covers core R&D activities directly aimed at creating new knowledge or capabilities, as well as supporting activities that are integral to the R&D process.

Common qualifying sectors include software development, engineering, biotechnology and manufacturing, though eligibility is assessed based on the nature of the activity rather than the industry. Activities that are routine, low-risk or commercially standard do not qualify, regardless of the sector in which they occur.

The two schemes carry distinct thresholds and entity eligibility rules. Under the RDTI:

• Minimum eligible expenditure of NZD 50,000 per income year, unless R&D is conducted through an approved research provider
• Maximum eligible expenditure of NZD 120 million per annum; businesses exceeding this threshold must seek prior approval
• Available to New Zealand tax-resident companies, branches, partnerships and joint ventures operating through a fixed establishment

Under the RDLTC:

• Cash credit calculated at 28% of eligible R&D losses, subject to a NZD 5 million annual cap or the total relevant labour-related taxes if lower
• Subject to wage intensity requirements and expenditure eligibility criteria
• Available to New Zealand companies only; branches, partnerships and joint ventures cannot claim

Both schemes require annual registration with Inland Revenue and Callaghan Innovation.

International productions accessing the New Zealand Screen Production Rebate must establish a New Zealand tax-resident entity or fixed establishment before incurring qualifying expenditure. The production entity is required to register with Inland Revenue for a tax file number and, where New Zealand-based activity exceeds the GST threshold of NZD 60,000, for GST. Regular GST returns must be filed and reconciled throughout production.

Non-resident cast and crew working in New Zealand are subject to withholding tax on New Zealand-sourced income, with rates depending on residency status and whether a tax treaty applies. The production entity acts as the withholding agent and must file the relevant returns with Inland Revenue. The final NZSPR rebate payment is treated as assessable income in New Zealand and must be reflected correctly in the entity’s tax position before the rebate is received.

The Game Development Sector Rebate (GDSR) offers eligible game development studios a 20% rebate on qualifying New Zealand expenditure. Key parameters are:

• Rebate rate: 20% of qualifying expenditure
• Maximum rebate: NZD 3 million per studio per annum
• Minimum spend: NZD 250,000 in eligible expenditure per eligibility period
• Eligibility period: 1 April to 31 March each year
• Annual funding pool: NZD 40 million, administered by NZ On Air on behalf of MBIE

Applications are submitted annually and studios may submit only one application per year, making early engagement with eligibility requirements important.

A foreign company can access New Zealand R&D tax incentives, but only through a New Zealand-based entity. The RDTI can be claimed by New Zealand companies, branches, partnerships and joint ventures, provided the entity is a tax resident or operates through a fixed establishment in New Zealand. The RDLTC is available to New Zealand companies only and cannot be claimed through a branch or partnership structure.

The refund or credit is paid directly to the eligible entity through the New Zealand tax system. For foreign businesses planning R&D activities in New Zealand, establishing the appropriate local structure before incurring expenditure is important, as only costs borne by the qualifying New Zealand entity can be included in a claim. For guidance on structuring options, see the guide to setting up a subsidiary in New Zealand.