R&D Tax Credit Documentation: What NZ Law Actually Requires You to Keep
Documenting your R&D work isn't optional paperwork — it's a legal record-keeping duty and, for the New to R&D Grant, an explicit deliverable. Here's what the law and the guidance actually say, and how to have evidence ready before IRD ever asks.
Key takeaways: New Zealand's general tax law requires every business to keep records supporting its tax position, R&D specifically. The RDTI and RDLTC both require documented, contemporaneous evidence of R&D time and expenditure to pass their eligibility tests. The New to R&D Grant goes further and requires a documented capability development plan as a funded deliverable, not just the R&D activity itself. IRD can review a claim for up to four years after it's filed. The businesses that come through that review cleanly are the ones with records built as they went, not reconstructed afterward.
The general legal duty: record-keeping isn't scheme-specific
Every New Zealand taxpayer is subject to a general record-keeping requirement under section 22 of the Tax Administration Act 1994. It requires you to keep records - in English, in New Zealand, and for a minimum retention period - sufficient for the Commissioner of Inland Revenue to readily ascertain your tax liability at any time.
This obligation exists independently of whether you claim an R&D tax credit. But when you do claim one, it means the burden of proof sits with you, the claimant, not with IRD. If a claim is reviewed and the supporting records don't exist, the default position is that the claim - or the portion of it lacking evidence - is disallowed. IRD is not required to prove your claim is wrong. You are required to be able to prove it's right.
RDTI and RDLTC: documentation is part of the eligibility test itself
For the R&D Tax Incentive (RDTI), governed under Subpart LH of the Income Tax Act 2007, and the R&D Loss Tax Credit (RDLTC), governed under Subpart MX, the record-keeping duty isn't just a general background obligation - it's built directly into how each scheme calculates what you can claim.
Both schemes require you to apportion labour costs between eligible R&D activity and everything else. The RDLTC's wage intensity test requires R&D labour to be at least 20% of your total labour costs before you qualify at all - a threshold that can only be demonstrated with real time-allocation data, not a year-end estimate. MBIE and IRD's published guidance for both schemes is explicit that this apportionment must be supportable with contemporaneous records: time recorded at or near when the work happened, not reconstructed from memory months later.
We've covered the wage intensity mechanics and what counts as acceptable evidence in detail in Why R&D Time Tracking Is No Longer Optional in FY2027. The short version: a percentage you can explain with a dataset survives review. A percentage you "roughly worked out" at year-end does not.
The New to R&D Grant: capability development is a documented deliverable
The MBIE New to R&D Grant is structured differently from RDTI and RDLTC - it's contestable grant funding governed by a funding agreement, not a tax credit under the Income Tax Act. But its documentation requirement is, if anything, more explicit.
Alongside your R&D activity narrative, the grant's write-up requires a dedicated R&D Capability Development section: a documented plan showing how the funding builds your organisation's ongoing capability to do R&D, not just the one project you're funded for. This means naming specific capability areas - intellectual property management, regulatory and compliance capability, project management, R&D information management - and setting out objectives with actual deliverables and dates attached, alongside your core R&D objectives.
In other words, for a New to R&D applicant, the documentation requirement isn't limited to evidencing what you did. Part of what you're funded to do is to document a capability plan and report against it. Treating that as an afterthought template to fill in at the end misses that it's one of the things MBIE is actually paying for.
Not if IRD asks. When.
IRD and MBIE can both review R&D claims after they're filed - IRD's own guidance notes claims may be reviewed for up to four years after submission. That's not a hypothetical. Every claim you file sits in a four-year window where a review request is a real possibility, and the records that support it need to still exist and still be intelligible when it lands.
The businesses that handle a review request smoothly aren't the ones who dig through old emails and Slack messages trying to reconstruct what happened eighteen months ago. They're the ones who can pull up a dataset - who did what, for how long, backed by contemporaneous notes - because it was captured steadily, period by period, the whole way through.
Building that body of evidence with Compliance
This is exactly the gap our Compliance tool closes. Instead of asking your team to reconstruct time allocation once a year under deadline pressure, each team member gets their own dedicated tracker link and logs a quick allocation - a percentage, a short note on what they worked on, optionally a voice note - on whatever cadence suits your business: weekly, monthly, quarterly, or otherwise.
Over a year, those small, contemporaneous entries become a structured, audit-ready record: a weighted-average time allocation per person and per period, a full log of notes describing what R&D work was actually done, and a complete history you can hand over as part of your body of evidence the moment IRD or MBIE ask for it - because you were never waiting for them to ask before you started keeping it.
Frequently Asked Questions
Do I legally have to keep records of R&D time and expenditure in New Zealand?
Yes. Section 22 of the Tax Administration Act 1994 requires all taxpayers to keep records sufficient for Inland Revenue to readily ascertain their tax liability. For an R&D tax credit claim, that means being able to show how you calculated your eligible R&D expenditure, including labour time apportionment.
What happens if IRD or MBIE ask for evidence I don't have?
The burden of proof sits with the claimant. If you can't produce records supporting a claimed percentage or amount, the unsupported portion of the claim is typically disallowed. Claims can be reviewed for up to four years after filing.
Does the New to R&D Grant require documentation beyond the R&D activity itself?
Yes. It requires a separate, documented R&D Capability Development plan covering areas like IP management, regulatory compliance, project management, and R&D information management, each with its own objectives and deliverables - not just a description of the R&D work.
How often should team members log R&D time allocation?
As often as is practical for your business, provided it's contemporaneous - weekly or monthly is common. What matters more than frequency is that entries are made close to when the work happened, not reconstructed at year-end from memory.
What's the easiest way to start building an R&D time-tracking record?
Identify your R&D team members and your core eligible activities, then have each person log a short, regular time allocation with notes. Our Compliance tool is built specifically for this - a dedicated link per colleague, minutes to set up, with reporting and an audit trail built in.