Important:
- To claim the R&D tax credit, you must submit a detailed statement online.
- In most instances, the last date for submitting a detailed statement was April 30 2010. Find out more
Support activities
What are support activities?
Support activities must be all of the following:
- wholly or mainly for the purpose of the SIE activities,
- required for the SIE activities, and
- integral to the SIE activities.
Otherwise-excluded activities (for example routine data collection) may be eligible as a supporting activity if they meet these criteria. Find out what research activities are excluded.
Support activities are only eligible if there are SIE activities they can be associated with. The support activities need not take place in the same income year as the SIE activity.
What is "wholly or mainly for"?
Support activities can only be eligible if they are "wholly or mainly for" the purpose of the SIE activities.
An activity you are undertaking for another purpose cannot be claimed as a support activity for eligible R&D just because it contributes to the eligible R&D activities. For example, data routinely collected for other purposes does not become an eligible support activity because it is also used as a control for an experiment.
Example - purpose of product
Company A is a boat-building company that designs innovative components for its boats. It develops a new type of keel which advances boat-building technology, and is eligible R&D. They are testing the keel on a boat they are building for a customer. Construction of the boat is not a qualifying support activity as the boat is not built mainly for R&D. It is built mainly for sale to a customer. None of the construction costs are eligible for the credit.
Note: Examples are simplified. You should check the detailed R&D information and/or consult a professional advisor.
What is "required for"?
An activity is required for R&D activities when it can be shown to be a necessary part of the systematic investigation of possible solutions (hypotheses).
An activity is not required for the SIE activity if it is possible to resolve the uncertainty or develop the novel application of the technology without it.
Required support activity is eligible only as much as it is necessary to support the SIE activities.
Example - activity required for
A local authority trading enterprise commissions R&D to develop a model for water flow in a catchment in relation to changes in climate and to forestry and farming practices. Data collection for the purposes of developing the model is an eligible support activity, but subsequent data collection to inform the use of the model in farming and forestry activities is no longer eligible as a support activity.
Note: Examples are simplified. You should check the detailed R&D information and/or consult your professional advisor.
What is "integral to"?
Activities are considered to be "integral to" an R&D activity if the R&D activities cannot occur without them. "Integral to" distinguishes support activities from more remote activities such as administrative tasks which do not constitute support activities but where expenditure may be eligible as overhead.
Examples of support activities
Support activities that could be eligible include:
- development of specialised software to assist in the design of the experiments
- planning the SIE activities
- routine crop management of plants required for a programme of eligible R&D activities
- the construction of any prototypes to be used in experiments.
Example - use of tools
A food company wishes to develop a food that provides added health benefit to consumers from an added bioactive component.
SIE activities are required to find ways to stabilise the component, and to check the effect of the stabilised component on taste and the effectiveness of the product.
A software tool is used to adjust the remainder of the formulation to accommodate different approaches used to stabilise the component.
The use of the tool is a support activity as its use in this manner is wholly and mainly for, required for and integral to the SIE activities.
Note: Examples are simplified. You should check the detailed R&D information and/or consult your professional advisor.
Planning
Planning can be eligible as a support activity, provided SIE activities follow. Eligible planning can include:
- defining the scientific or technological objectives
- assessing scientific or technological feasibility and developing the hypothesis (proposed solution)
- high-level planning of the SIE activities, and
- detailed planning of the SIE activities.
SIE does not go ahead
If your support activity occurs before the SIE activity and a decision is taken to halt the project before the SIE activities begin, the support activities are ineligible.
New Zealand legislation
Income Tax Act 2007
- LH 7(1)(b)
Record keeping
Find out more about keeping records to support your claim.
Find out more
- What is research that is systematic, investigative and experimental?
- R&D activities aimed at resolving scientific or technological uncertainty
- R&D activities involving an appreciable element of novelty
- R&D activity need not be successful to be eligible
- Determining when eligible R&D activities start and finish
Date published: 01 Oct 2008
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