RDTI Changes 2026: In-Year Payments, Late Filing Flexibility, and What It Means for NZ Businesses

The government has announced significant updates to the R&D Tax Incentive (RDTI) scheme - the most significant update to the scheme in several years. The three main changes include in-year payment capabilities, Commissioner discretion regarding late filings, and adjustments to internal software spending caps.

In-Year Payments: Fixing the Cash Flow Problem

Historically, the RDTI operated with substantial delays. Businesses incurred R&D expenses, obtained General Approval, filed supplementary returns, and typically received their 15% credit twelve to eighteen months later upon tax return processing.

This timing created genuine challenges for early-stage companies with limited resources - businesses were effectively pre-funding the government's contribution to their R&D programme.

The new in-year payment structure allows credits to flow during the tax year as eligible expenses occur, rather than waiting for year-end reconciliation. Implementation specifics - including payment frequency, documentation requirements, and reconciliation procedures - remain under development.

Late Filing Discretion: The Hidden Gem

Previously, missing RDTI supplementary return deadlines resulted in complete credit forfeiture. The R&D Loss Tax Credit carried particularly strict requirements: filing within thirty days of the IR4 due date without exception.

The updated approach grants the Commissioner discretion to accept late filings when genuine circumstances exist. While late submission remains inadvisable and not automatically accepted, legitimate reasons - such as accountant transitions, complex group structures, or acquisition complications - now provide potential relief pathways.

Internal Software Cap: A Tightening That Affects Fewer Than You Think

The non-administrative internal software expenditure cap is being reduced from $25 million to $3 million.

This adjustment primarily affects large enterprises. Small to medium businesses spending $200,000 to $2 million annually on R&D won't face constraints from this tighter ceiling. Businesses approaching or exceeding the $3 million threshold should consult with chartered accountants regarding claim structuring.

The requirement that eligible internal software R&D produce "wider benefits" reinforces existing boundaries rather than introducing new restrictions. Software developed solely for internal productivity remains ineligible.

Mining: Expanded Access

Mining sector businesses now access a broader range of qualifying R&D expenditure. This sector-specific change primarily affects extractive industry companies rather than technology, SaaS, medtech, or agritech organisations.

What This Means in Practice

For current RDTI participants, understanding in-year payment implementation details and optimising claim structures represents the immediate priority.

Non-participating businesses should consider applying - improved cash flow timing strengthens the scheme's financial case. The compressed lag between expenditure and credit receipt increases effective incentive value.

Businesses that previously missed filing deadlines might pursue retrospective relief through the Commissioner's new discretionary authority - an opportunity previously unavailable.

Staying on Top of It

These developments introduce additional administrative complexity. Managing in-year payment documentation, understanding late filing relief criteria, and monitoring software eligibility rules require attention.

R&D by Automatax is developing compliance tools providing real-time R&D expenditure tracking, early issue identification, and documentation generation supporting in-year payment claims as final rules emerge.

Get in touch if you'd like early access or want to understand how these changes affect your existing claim structure.