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
Cosmetic or stylistic changes
Excluded activities
Activities excluded from being systematic, investigative and experimental (SIE) activities are making cosmetic or stylistic changes to:
- materials
- products
- devices
- processes
- services.
Example - stylistic changes
Company A wants to refresh its product range and decides to move into acid colours and to incorporate curved surfaces.
This work produces a new product range but does not develop the underlying technology. These activities are cosmetic or stylistic changes and are ineligible for the R&D tax credit as SIE activities.
Note: Examples are simplified. You should check the detailed R&D information and/or consult your professional advisor.
Can these activities be support activities?
Where the technical objectives for eligible R&D include cosmetic or stylistic change, work on the cosmetic or stylistic activities may be eligible as a support activity.
A distinction needs to be made between stylistic work necessary to support the SIE activities and stylistic changes being made as part of the same commercial project, but not required for the SIE activities.
To be eligible as a support activity, the stylistic work must be all of the following:
- wholly or mainly for the purpose of the SIE activities
- required for the SIE activities
- integral to the SIE activities.
Example - change to casing
Two eligible parties have a joint venture to upgrade a vacuum cleaner. The eligible R&D involves redeveloping the motor to be significantly more energy efficient and smaller. As a result of the redesign of the motor the casing is no longer an appropriate shape or structure, and needs to be redesigned. The stylistic changes to the casing may be eligible as support activity.
Note: Examples are simplified. You should check the detailed R&D information and/or consult your professional advisor.
Example - cosmetic change to casing
The same parties are redeveloping another product so it can be remotely activated by mobile phone.
The eligible activities involve changes to the existing remote activation module.
At the same time, the casing for the product is being redesigned to give it a more contemporary look. These changes are not eligible as a support activity as they are not wholly or mainly for the purpose of the SIE activities.
Note: Examples are simplified. You should check the detailed R&D information and/or consult your professional advisor.
New cosmetic products
Work to develop a new stylistic or cosmetic product or process, such as a new type of dye, glaze, or embossing method, may be eligible for the tax credit provided it involved SIE activities to resolve scientific or technological uncertainty or to introduce appreciable novelty.
New Zealand legislation
Income Tax Act 2007
- schedule 21 part C, clause 5
- LH 7(1)(b)
- LH 7(2)(b)
Date published: 30 Sep 2008
Back to top