Income Tax Act 2007

Schedule 21: Excluded activities for research and development activities tax credits

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"What activities are not included in research and development tax credits?"

You need to know what activities are not included in research and development tax credits. These activities include preproduction, routine debugging of software, and market research. You can find more information in the Income Tax Act 2007. You are excluded from tax credits for activities like supporting existing software, routine maintenance, and commercial activities. These activities also include management studies, organisational design, and ineligible software development. If section 68CB of the Tax Administration Act 1994 applies to you, you are excluded from tax credits for activities not approved under that section. You should look at the specific rules for core research and development activities and supporting research and development activities. These rules are in Schedule 21 of the Income Tax Act 2007, which is empowered by s LY 2. You can find more information about these rules and how they apply to you.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS199577.

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Schedule 20: Expenditure on farming, horticultural, aquacultural, and forestry improvements, or

"Claiming tax deductions for farm and business improvements"

Schedule 21: Expenditure and activities related to research and development, or

"Extra info about research and development costs for tax purposes"

21Excluded activities for research and development activities tax credits Empowered by s LY 2

AActivities that are excluded from the definition of core research and development activity

Preproduction activities, including demonstration of commercial viability and tooling up.
Routine de-bugging of existing computer software.
Supporting or making minor improvements to existing computer software using known methods.
Routine software and computer maintenance.
Market research, market testing, market development, or sales promotion, including consumer surveys.
Commercial, legal, or administrative aspects of patenting, licensing, or other similar activities.
Activities involved in complying with statutory requirements or standards.
Management studies.
Activities relating to organisational design.
Ineligible internal software development.
Research in social sciences, arts, or humanities.
Quality control or routine testing of processes, services, or goods.
Routine collection of information.
Minor adaption of, or improvement to, existing processes, services, or goods.
Bug testing, beta testing, system requirement testing, user acceptance testing, and data integrity testing.
Data mapping and data migration testing.
Testing or comparing the efficiency of algorithms that are already known to work.
Testing security protocols or arrangements.
Converting existing systems to, or integrating existing systems with, new software platforms.
Making cosmetic or stylistic changes to processes, services, or goods.
Reproduction of a commercial product or process by a physical examination of an existing product or system, or from plans, blueprints, detailed specifications, or publicly available information.
Carrying out routine operations on data, including presentation of data.
If section 68CB of the Tax Administration Act 1994 applies for the person, activities that are not approved under that section.

Notes

Schedule 21 Part A clause 5: repealed (with effect on 1 April 2019), on 30 March 2021, by section 136(1) (and see section 136(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).

BActivities that are excluded from the definition of supporting research and development activity

Preproduction activities, including demonstration of commercial viability and tooling up.
Routine de-bugging of existing computer software.
Supporting or making minor improvements to existing computer software using known methods.
Routine software and computer maintenance.
Market research, market testing, market development, or sales promotion, including consumer surveys.
Commercial, legal, or administrative aspects of patenting, licensing, or other similar activities.
Activities involved in complying with statutory requirements or standards for pre-existing processes, services, or goods.
Management studies.
Activities relating to organisational design.
Ineligible internal software development.
If section 68CB of the Tax Administration Act 1994 applies for the person, activities that are not approved under that section.

Notes

Schedule 21 Part B clause 5: repealed (with effect on 1 April 2019), on 30 March 2021, by section 136(2) (and see section 136(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Schedule 21 Part B clause 12: inserted (with effect on 1 April 2019), on 23 March 2020, by section 187(1) (and see section 187(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).