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Types of eligible expenditure or depreciation loss flowchart

Question 1
Is the expenditure included in Part A and not excluded by Part B of Schedule 21, Income Tax Act 2007? If you answered Yes then go to Question 2. If you answered No then this is unlikely to be eligible R&D expenditure or depreciation loss*.
Question 2
Is the expenditure deductible for income tax? If you answered Yes then your expenditure, when incurred, may be eligible for the tax credit*. If you answered No then go to Question 3.
Question 3

Is the capital expenditure on the intended development of:

  • depreciable intangible property, or
  • depreciable tangible property for sole R&D use (including prototypes and plant, and even if the R&D is a failure)?
 If you answered Yes then your expenditure, when incurred, may be eligible for the tax credit*. If you answered No then go to Question 4.
Question 4

Is the expenditure:

  • incurred on labour, labour-related support costs, or is it contracted-out R&D expenditure,
  • on scientific, investigative and experimental activities (not on support activities), and
  • not directly incurred in the physical construction of a tangible asset?
 If you answered Yes then your expenditure, when incurred, may be eligible for the tax credit*. If you answered No then go to Question 5.
Question 5

Is the capital expenditure on a:

  • depreciable asset used in R&D ("facilitative asset"), or
  • depreciable asset which is the product of R&D but which will not have sole use in eligible R&D, and all the activities involved in the construction of the asset are R&D activities?
 If you answered Yes then the depreciation, to the extent that the asset is used in eligible R&D, may be eligible for the tax credit*. If you answered No then this is unlikely to be eligible R&D expenditure or depreciation loss*.
*To find out more, check the detailed R&D information or consult your professional advisor.

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