"Things you can't claim as research and development for tax purposes"
When you look at the Income Tax Act 2007, you will find a schedule called Proscribed R&D activities. This schedule tells you what activities are not allowed as research and development. You can find the definitions of R&D expenditure and R&D material in s YA 1.
You are not allowed to claim activities done outside of New Zealand as research and development. This also includes things like buying or selling land, unless the land is only used for research facilities. You cannot claim activities like prospecting for minerals or drilling for oil, and you cannot claim research in social sciences, arts, or humanities.
Some other activities that are not allowed include market research, quality control, and making small changes to products. You also cannot claim routine tasks like collecting information or doing management studies. These activities are all listed in the Proscribed R&D activities schedule, which is part of the Income Tax Act 2007, as empowered by s YA 1.
Schedule 23: Meaning of permanent establishment, or
"What is a permanent establishment: a fixed place where a business operates, like an office or factory."
22Proscribed R&D activities Empowered by
s YA 1, definitions of R&D expenditure, R&D material
The following table is small in size and has 2 columns. In the table, the first column gives the number of the row. The second column describes the proscribed R&D activity.
1
An activity performed outside of New Zealand.
2
Acquiring or disposing of land, and related activities, except if the land is used exclusively for housing research or development facilities.
3
Acquiring, disposing of, or transferring intangible property, core technology, intellectual property, or know-how, and related activities (for example, drafting sale and purchase agreements for patents).
4
Prospecting for, exploring for, or drilling for, minerals, petroleum, natural gas, or geothermal energy.
5
Research in social sciences, arts, or humanities.
6
Market research, market testing, market development, or sales promotion, including consumer surveys.
7
Quality control or routine testing of materials, products, devices, processes, or services.
8
Making cosmetic or stylistic changes to materials, products, devices, processes, or services.
9
Routine collection of information.
10
Commercial, legal, and administrative aspects of patenting, licensing, or other activities.
11
Activities involved in complying with statutory requirements or standards.
12
Management studies or efficiency surveys.
13
Reproduction of a commercial product or process by a physical examination of an existing system or from plans, blueprints, detailed specifications, or publicly available information.
14
Pre-production activities, such as a demonstration of commercial viability, tooling-up, and trial runs.
