Turn your R&D losses into cash
If your company is investing heavily in R&D and running at a loss, you could be sitting on a cash refund. The R&D Loss Tax Credit lets eligible NZ companies cash out up to 28% of their R&D tax losses in the same year, rather than saving them for future profits. Yet many companies doing serious R&D don't know this exists.
What is the R&D Loss Tax Credit?
When a business makes a tax loss, those losses are normally carried forward to reduce tax in future profitable years. That can help if all goes well, but leaves you out of pocket in the meantime, at exactly the time you’re investing heavily in R&D.
The R&D Loss Tax Credit changes that. Instead of carrying your R&D losses forward, you can cash them out and receive a refund of up to 28% of your eligible R&D expenditure in the same tax year. That cash goes straight back into your business. to spend as you see fit.
This programme is entirely separate from the R&D Tax Incentive (RDTI). The definitions of R&D and eligibility rules are different. The early refund is normally ‘repaid’ by paying future income tax when your business becomes profitable, but an early repayment applies in some cases, such as selling IP, company migration, liquidation, or a change in ownership.
Am I eligible for the R&D Loss Tax Credit?
Be a private company who is tax resident in New Zealand.
Have eligible R&D expenditure for that year.
Have a net tax loss in the income year you wish to apply for.
Have invested a significant amount of wages, salaries or contractor expenses in R&D (several calculations apply). Own (solely or jointly) the intellectual property or know-how resulting from the R&D.
A company cannot apply for R&D Loss Tax Credits if:
It's listed on a recognised stock exchange.
It's owned or controlled by a public authority, Crown research institute, state enterprise, or local authority.
It's treated as a tax resident of a foreign country under a double tax agreement.
It's a look-through company.
It was established under the Education and Training Act 2020, the Pae Ora (Healthy Futures) Act 2022, or the Crown Entities Act 2004.
.png)
How we work with you
Assess your eligibility
The eligibility criteria for the R&D Loss Tax Credit are specific, particularly the wage intensity test and the IP ownership requirement. We assess your position early so you know where you stand before committing time to the process.
Get your records in shape
The size of your refund depends directly on the quality of your R&D cost records. We help you identify and document eligible expenditure correctly, so you claim your full entitlement every time.
Prepare and submit your claim
We prepare your R&D Loss Tax Credit applications, calculate your eligible credit, prepare answers for the R&D definitions questions, and manage the entire submission process with IRD. You get accurate figures from the start and complete support to the end.
Keep you on track each year
The R&D Loss Tax Credit requires an annual submission through your income tax account on myIR until your cashed-out balance is repaid. We review your situation yearly to ensure you make the right submissions every time.
What you actually get from us
Here's how BlueRock's grants and tax specialists help you access the R&D Loss Tax Credit:
- Free consultation to assess your eligibility for the programme.
- Independent advice on whether the R&D Loss Tax Credit, the RDTI, or both programmes suit your situation.
- Review of your R&D expenditure records to identify and document eligible costs.
- Calculation of your R&D wage intensity to confirm you meet the minimum threshold.
- Preparation of your R&D Loss Tax Credit application and supporting claim documentation.
- Direct liaison with IRD throughout the application and review process.
- Annual check-ins to manage your ongoing supplementary return obligations.
- Record-keeping advice to keep future claims clean and compliant.
What sets BlueRock apart?
We're built for New Zealand businesses. We move fast, charge fairly, and deliver great commercial outcomes. See what our clients say...
Tom Moore - Director
Tom leads BlueRock's New Zealand office and heads the Grants and Incentives teams across Australia and New Zealand. He's an expert in R&D tax incentives and funding, with global experience in NZ, Australia and the UK. With degrees in both science and finance, and extensive experience in business advisory, Tom has worked with garage startups, listed tech companies and everything in between.
Corey Laverty - Manager
Corey specialises in research funding, with over 11 years' experience in research management and advisory for leading Australian and European universities and research organisations. As a scientist who's also trained in economics, Corey brings the detailed understanding needed to write technical narratives and project pitches that hold up under scrutiny.
R&D Tax Loss Credit FAQs
We’ve been able to help hundreds of innovative businesses just like yours to get the funding they need. If your questions aren't answered here, get in touch for a chat to learn more.
The R&D Loss Tax Credit (RDLTC) is a government programme that lets eligible NZ businesses receive a cash refund of up to 28% of their R&D tax losses in the same year, rather than carrying those losses forward to future years. It has been available to NZ businesses for eligible R&D expenditure incurred on or after 1 April 2015, under Subpart MX of the Income Tax Act 2007.
To qualify, your company must be a NZ tax resident, making a net loss in the relevant tax year, and have eligible R&D expenditure. You must also pass the R&D wage intensity test, meaning at least 20% of your total labour expenditure must be spent on R&D (this can be calculated in several ways). You need to own or jointly own the intellectual property or know-how resulting from the R&D. Certain company types are excluded, including listed companies and those majority-owned by public authorities.
The credit pays up to 28% of your eligible R&D losses as a cash refund, up to a maximum of $560,000 per year. The actual amount is capped at the smallest of four figures: 28% of your R&D expenditure, 28% of your net tax loss, 28% of NZ$2,000,000, or 28% of your total R&D labour expenditure multiplied by 1.5. For most early-stage businesses, the R&D labour figure is the binding constraint.
Yes, they are separate programmes. The RDTI provides a 15% annual tax credit on eligible R&D expenditure and is available to both profitable and loss-making businesses. The RDTI credit can be refunded in some cases. The R&D Loss Tax Credit is specifically for businesses in a net tax loss position, and provides a cash refund of up to 28% of eligible R&D losses in the same tax year. Some businesses can access both programmes, with a combined benefit of up to 43% of R&D costs.
Yes. The advance payments are treated as ‘repaid’ once your business begins making a profit, through standard income tax payments. Some amounts may be repayable earlierif a ‘loss recovery’ event occurs, such as selling or transferring R&D intellectual property, company migration, liquidation, amalgamation, or a sale of more than 90% of the company's shares.
We’ve been able to help hundreds of innovative businesses just like yours to get the funding they need. If your questions aren't answered here, get in touch for a chat to learn more.
The R&D wage intensity test requires that at least 20% of your total labour expenditure is spent on R&D. The calculation includes salaries and wages paid to R&D staff, amounts paid to shareholder-employees for R&D work, and 66% of contractor costs for R&D (to exclude profit and non-wage components). You must either include or exclude fringe benefits, FBT, and employer super contributions consistently across both the R&D and total labour figures.
No, the credit is only available to individual companies. If your company is part of a wider group, the group as a whole must be in a tax loss position for the year. The R&D wage intensity test must also be passed across the entire group's total R&D labour expenditure divided by the group's total labour expenditure. Each company in the group that is claiming must also meet the individual eligibility requirements.
Insights
Research, strategy, and practical guidance for navigating modern R&D challenges.
Check out our other services
Focused services for your needs
Ready to move forward?
Let's talk about what comes next for your organization.