The R&D Tax Incentive (RDTI) can be an excellent funding resource for eligible manufacturing businesses; however, many are leaving funding on the table. Nick Prattley, Director at Swell, explains why so many manufacturers are missing out and how they can tap into this valuable incentive.

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Awareness and Perception

One of the biggest challenges for manufacturers is simply not knowing the R&D Tax Incentive exists. As Nick explains, "Our data shows us there’s a gap between manufacturers and the broader innovation ecosystem." Many manufacturers—especially those that have been around for decades—tend to keep their head down when developing new products or improving their processes and don’t see themselves as part of the R&D world.

On top of that, there’s a mindset that government support feels like a “handout” or that the application process is too complicated. In reality, the RDTI isn’t a competitive grant — it’s an entitlement based on R&D activities that eligible manufacturers are already carrying out.

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Eligibility: It’s All About Uncertainty

To be eligible for the RDTI, businesses need to show they’re tackling scientific or technological uncertainties when developing new or improved products or processes. However, many manufacturers think their innovation doesn’t count as R&D because they’re not “groundbreaking” enough.

Understanding the concept of ‘uncertainty’ can be tricky, and it can come in many forms. For example, a manufacturer might face outcome uncertainty — not knowing if they can achieve a desired result, like producing a stronger, lighter product within strict technical parameters. They might also deal with method uncertainty, where the challenge lies in figuring out the most efficient or scalable manufacturing process—for which there is no existing knowledge of how to achieve.

Nick shares an example of a high-performance marine technologies manufacturer who didn’t think their work qualified as eligible R&D, but after Swell helped them break down their activities, they realised their new product development and product improvements were eligible—and they secured$250,000 in tax credits.

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Best Practice: R&D as a Strategic Tool

Manufacturers who embrace the R&D Tax Incentive often view it as more than just a way to save money—they see it as a smart business practice. Regularly accessing the incentive allows them to reinvest in their business, improving processes and products year after year.

“The best manufacturers don’t just see the RDTI as a financial boost; they treat it as part of their long-term growth strategy,” says Nick. "It creates a virtuous cycle: tax credits fuel innovation, which drives more investment in R&D, leading to a higher R&D tax credit, and so on."

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Missed Opportunities

Manufacturers leave significant money on the table by not engaging with R&D tax incentives. For every year that a business ignores the RDTI, there’s the potential to miss out on significant funding which could be reinvested in new projects, better products, or more efficient processes.

Nick points out that by ignoring the RDTI, manufacturers risk falling behind: “Often, new client’s will tell us that their competitors have been leveraging this incentive for a long time, giving them a bigger budget for innovation. Over time, that uneven playing field has held them back.”

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Real-World Success Stories

Take New Ground Coffee (NGC), for example. After a failed attempt to access the R&D tax incentive, Swell helped them to secure $150,000 in credits, and helped NGC keep pushing their innovation forward. It’s just one example of how R&D tax credits can make a tangible difference.

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How Swell Can Help

Accessing R&D tax credits doesn’t have to be a headache.Swell’s end-to-end support — from identifying qualifying activities to managing the paperwork and dealing with Inland Revenue and Callaghan Innovation — takes the stress out of the process. We make sure manufacturers can focus on what they do best while still benefiting from the RDTI.

Christopher Boyle, Executive Chair of Fabrum, says, “Swell’s expert guidance in RDTI and grant applications has been invaluable, optimising our R&D funding and minimising staff effort.”

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Don’t Miss Out

The R&D Tax Incentive is an incredible opportunity for New Zealand manufacturers to unlock millions in funding. Don’t let misconceptions or perceived hurdles stand in your way. With Swell’s expert help, the process is easier than you think—and the rewards could be a game-changer for your business. Let’s get started today.