NEW ZEALAND GAZETTE, No. 132 — 3 DECEMBER 2015

external intangible assets (e.g. 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

In addition to the Business Eligibility Criteria stated earlier, to be eligible to receive funding under this initiative,
the general rule is that a business must not currently be receiving an R&D Growth Grant or must not be eligible
to receive an R&D Growth Grant (under the non-transitional eligibility criteria). The exception to this rule is if the
business is undertaking 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);
• 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.

Parameters Specific to This Initiative

Definition of Eligible Research and Development Expenditure for R&D Project Grants

R&D 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.

R&D undertaken outside of New Zealand is not eligible for co-funding, except in limited cases where Callaghan
Innovation expressly permits it. In deciding whether to co-fund R&D undertaken outside New Zealand, Callaghan
Innovation will consider the benefits to New Zealand and whether similar expertise or facilities are available in
New Zealand.

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 up to 40 per cent of the eligible R&D expenditure of a
  project;
• any eligible R&D beyond the first $800,000.00 of eligible R&D expenditure of a project (or projects if the
  business is receiving multiple R&D Project Grants simultaneously) will be funded at 20 per cent;

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