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LY 1: Research and development tax credits
or “Tax credits for businesses doing research and development”
You could also call this:

“Definition of core and supporting research and development activities for tax purposes”

You might hear about something called a ‘core research and development activity’. This is when someone does work in a careful way to make new knowledge, or to make things, services, or ways of doing things better or brand new. They’re trying to solve a problem that science or technology hasn’t figured out yet.

But it’s not a core research and development activity if the answer to the problem is already out there for everyone to see, or if a smart person who knows a lot about that area of science or technology could easily work it out.

Also, it doesn’t count as this type of activity if the work is done outside of New Zealand, or if it’s one of the things listed in schedule 21, part A.

A ‘research and development activity’ is either one of these core activities we just talked about, or something called a ‘supporting research and development activity’.

A supporting research and development activity is work that’s needed to help with the core activity. It has to be really important for doing the core activity, and its main job is to make the core activity possible.

But, just like with core activities, supporting activities don’t include things listed in schedule 21, part B.

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Next up: LY 3: When this subpart applies

or “This section outlines who can claim tax credits for research and development in New Zealand”
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Part L Tax credits and other credits
Research and development tax credits

LY 2Key terms

  1. Core research and development activity—

  2. means an activity that—
    1. is conducted using a systematic approach; and
      1. has a material purpose of creating new knowledge, or new or improved processes, services, or goods; and
        1. has a material purpose of resolving scientific or technological uncertainty; but
        2. does not include an activity, if knowledge required to resolve the uncertainty, described in paragraph (a)(iii), is—
          1. publicly available:
            1. deducible by a competent professional in the relevant scientific or technological field; and
            2. does not include an activity to the extent to which it is performed outside New Zealand; and
              1. does not include an activity to the extent to which it is described in schedule 21, part A.

                1. Research and development activity, for a person, means an activity that is—

                2. a core research and development activity:
                  1. a supporting research and development activity.

                    1. Supporting research and development activity—

                    2. means an activity that has the only or main purpose of, is required for, and integral to, conducting a person’s core research and development activity; but
                      1. does not include an activity to the extent to which it is described in schedule 21, part B.

                        Notes
                        • Section LY 2: inserted, on , by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).