New Zealand businesses have now claimed government support for more than $10 billion of research and development spending through the Research and Development Tax Incentive, a scheme the Government says is pulling in record numbers of small firms.
Science, Technology and Innovation Minister Penny Simmonds announced the milestone on 21 July, pointing to the speed at which companies have taken up the credit since it started. It took around three years for the scheme to back its first $1 billion of R&D activity, and a little under four more years to reach $10 billion.
“R&D is one of the key drivers of productivity, competitiveness and long-term economic growth,” Simmonds said. “That growth shows the increasingly important role RDTI is playing in supporting business investment in R&D.”
The Research and Development Tax Incentive, usually shortened to RDTI, gives eligible businesses a tax credit worth 15 percent of their qualifying research spending. Firms need to spend at least $50,000 a year on eligible R&D to claim, and the credit is capped at $120 million of expenditure. The scheme has applied since the 2019/20 tax year and is administered by Inland Revenue, which handles applications through its myIR online system.
The point of a tax credit like this is to change the sums a company does before it commits to a risky project. Research is expensive, the payoff is uncertain, and a lot of the wider benefit spills over to other firms and to the country rather than landing on the balance sheet of the business that paid for it. Left to the market, economists have long argued, private firms tend to under-invest in it. The RDTI is designed to tip more of those close-call decisions towards going ahead.
On the Government’s own numbers, that is happening. Each dollar of RDTI support has drawn out an estimated $1.40 of additional R&D investment that would not otherwise have taken place. As of 2025 the scheme had generated around $1.8 billion in extra research spending and an estimated $6.7 billion in total economic benefits for New Zealand, the Minister said.
Perhaps the most telling figure is who is signing up. Following the 30 June application deadline, initial results show record rates of application, and more new businesses enrolled this year than in any year since 2021. Much of that is being driven by smaller companies rather than the large corporates that dominated the early years of the scheme.
Simmonds put some of that reach down to a change in who runs the scheme behind the scenes. Callaghan Innovation, the Crown research and innovation agency that once fronted much of the support for R&D businesses, has been wound down, and its services moved across to the Ministry of Business, Innovation and Employment. The Government says that shift has allowed a step-up in outreach to small businesses in the regions, many of which had never claimed the credit or did not know they qualified.
The credit has been a rare point of continuity across governments. The RDTI was legislated in 2019 under the previous Labour-led government, replacing the older Callaghan Innovation Growth Grants, and has been kept and expanded by the current coalition. As part of Budget 2026 the Government announced that in-year payments would be introduced, so that R&D businesses can receive their tax credits sooner rather than waiting until after the end of the tax year. For a young company burning through cash on staff and equipment, the timing of that money can matter as much as the amount.
“The Government wants to create an environment where businesses have the confidence to invest, grow and compete internationally,” Simmonds said.
That confidence has been in short supply. Firms have spent the past two years squeezed by high interest rates, soft demand and stubborn costs, and the Reserve Bank has warned that inflation pressures have not fully cleared. New Zealand also spends less on research and development as a share of the economy than most of the countries it likes to measure itself against, a gap that successive governments have promised to close and never quite have. Against that backdrop, a scheme that is quietly pulling more small firms into doing research, rather than fewer, is one of the more encouraging signals in the business data.
The caveats are worth keeping in view. The $10 billion figure is the total business spending the credit has helped support, not the cost to taxpayers, which is a fraction of that. And the wider benefit numbers are official estimates rather than audited results, so they should be read as the Government’s best case rather than a settled fact. What is not in dispute is the direction of travel. More companies are claiming, more of them are small, and more of them are outside the main centres than when the scheme began.
For a country that talks constantly about lifting its productivity and weaning its economy off dairy and property, that is a genuinely good news story, and one that has arrived without much fanfare.
What do you make of the R&D tax credit and the state of business investment in New Zealand? Have you claimed it, or looked into it for your own firm? Share your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job π
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