31 OCTOBER 2013 NEW ZEALAND GAZETTE, No. 146 3993

• Routine design of tools, jigs, moulds and dies, or seasonal or other periodic design changes to existing products. However, expensed design activities involved in developing a new product or process are eligible.

• Activities involved in ensuring that existing products or processes comply with statutory requirements or standards, and quality control, routine testing or trouble-shooting during commercial production. However, testing in search of significant product or process improvements is eligible.

• Adapting an existing product or process to a particular customer’s need or site.

• Supporting, de-bugging or making minor improvements to existing computer software.

• Market research or surveys, market testing, market development or sales promotion, management studies, efficiency surveys or the routine collection of information.

• Any costs involved in protecting, licensing, selling or defending intellectual property or of acquiring or using external intangible assets (eg patent licences).

• Interest expenses or lease payments of any kind, and any overheads that are not closely linked to R&D activities. Eligible overheads include finance, personnel, training, travel, administration and library activities associated with R&D, and reasonable R&D-related transportation, storage, cleaning, repair, maintenance and security activities.

• Prospecting or exploring for minerals, petroleum, natural gas or geothermal energy.

• Research in the social sciences, arts or humanities.

2. Research and Development (R&D) Project Grants

POLICY OBJECTIVES

The objectives of this initiative, in addition to the overall policy objective of the business-led R&D tool, are to:

• support greater investment by businesses in R&D activities and generate wider benefits to the New Zealand economy; and

• develop businesses with less established R&D programmes into stable and substantial R&D performers.

ELIGIBILITY CRITERIA

To be eligible for funding under this initiative the following criteria must be satisfied:

• Only businesses are eligible to receive funding via this initiative. A business or group of businesses may nominate a representative to receive funding.

• A business must have at least one director who is resident in New Zealand and at least one of the following must be true:

  • the business is incorporated in New Zealand;
  • the business has a centre of management in New Zealand; or
  • the business has a head office in New Zealand.

• Businesses may not be an entity established under or governed by the Education Act 1989, Crown Research Institutes Act 1992, Local Government Act 2002, Local Government (Auckland Council) Act 2009, the New Zealand Public Health and Disability Act 2000, or the Crown Entities Act 2004; or an entity that is 50 per cent or more owned by one or more of those types of entities.

PARAMETERS SPECIFIC TO THIS INITIATIVE

DEFINITION OF ELIGIBLE RESEARCH AND DEVELOPMENT EXPENDITURE FOR R&D PROJECT GRANTS

Project grants fund research and development using the following definitions:

• Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

• Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.

R&D is distinguished from non-R&D by the presence or absence of an appreciable element of innovation. If the activity departs from routine and breaks new ground it is normally R&D; if it follows an established pattern it is normally not R&D.

RELATIONSHIP WITH R&D GROWTH GRANTS

• Businesses that receive a R&D Growth Grant will only be eligible for R&D Projects Grants if they undertake a "collaborative" R&D project.

• A collaborative R&D project is one where:

  • at least two businesses (that are independent and not within common control) are undertaking a joint project for mutual benefit (each party is expected to gain value);
  • at least one of the businesses is receiving a R&D Growth Grant;
  • each business is contributing substantially to both the financial and technical requirements of the project; and
  • the project structure indicates the project has shared responsibility and decision-making.

CO-FUNDING RATES

Callaghan Innovation will determine the co-funding rate according to the following rules:

• R&D Project grants will typically provide funding for 30–50 per cent of the eligible R&D expenditure of a project.

• Collaborative R&D projects will only receive funding for 15–30 per cent of the R&D eligible expenditure on top of the R&D Growth Grant. If one of the contributing businesses does not have a R&D Growth Grant, the R&D Project Grant will typically provide funding for 30–50 per cent of their eligible expenditure.

• Callaghan Innovation must ensure the total annual funding allocated to all R&D Project Grants does not exceed 40 per cent of eligible expenditure.