Inland Revenue is seeking feedback on tax treatment of software development and SaaS costs. Officials aim to understand if existing provisions create unnecessary compliance burdens and to identify areas where uncertainty persists.
New Zealand’s Inland Revenue has launched a public consultation on the income tax treatment of software development expenditure, as well as the customisation and configuration costs associated with software-as-a-service (SaaS) products 17 November 2025.
The consultation seeks feedback on whether the current rules deliver appropriate tax outcomes for both software development expenditure and SaaS customisation and configuration costs. Officials aim to understand if existing provisions create unnecessary compliance burdens and to identify areas where uncertainty persists.
A key focus is the provision allowing deductions for research and development (R&D) expenditure related to software, including SaaS development. The measure was introduced to simplify the capital–revenue distinction for R&D, but Inland Revenue notes concerns about its practical application and the extent to which it reflects changes in industry practice since its introduction in 2003.
The consultation is set to conclude on 30 January 2026.
