Guidelines
Ministerial Direction for Business R&D Grants
Version
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V01
Date
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December 2015
1. Introduction
1.1.
Purpose
Callaghan Innovation manages the Business Research and Development (R&D) Grants scheme on behalf of
Government. The objective of these grants is to increase investment by New Zealand businesses in research
and development (R&D) to support long term economic growth.
To enable the assessment of proposals for Business Research and Development (R&D) Grant funding, each
application decision and allocation will be made in based on:
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Policy and grant initiative objectives
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Grant eligibility criteria
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Judgement criteria and parameters specific to each grant initiative, where applicable
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Public Finance Act 1989
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Parameters specific to the business-led R&D tool.
1.2.
Business Eligibility Criteria
To be eligible for a R&D Grant, businesses must satisfy one of the following:
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A company registered under the Companies Act 1993; or
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A limited partnership registered under the Limited Partnerships Act 2008; or
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A Māori incorporation or a trust established under Te Ture Whenau Māori Act 1993, a trust established
on behalf of Māori claimants to receive and manage assets as part of the settlement of a claim under
the Treaty of Waitangi, a Māori statutory body, or a business that is controlled by one or more of these
types of Māori entities.
Businesses may not be:
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An entity listed in schedule 1 of the State Owned Enterprises Act 1986
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An entity listed in schedule 4A of the Public Finance Act 1989
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An entity established under or governed by the:
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Education Act 1989
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Crown Research Institutes Act 1992
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Local Government Act 2002
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Local Government (Auckland Council) Act 2009
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The New Zealand Public Health and Disability Act 2000
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The Crown Entities Act 2004
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An entity that is 50% or more owned by one or more of the types of entities listed above
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An entity that would bring the reputation of Callaghan Innovation or the Research and Development
(R&D) Grants programme into disrepute.
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1.3.
Definition
R&D is defined in NZ IAS38, the New Zealand equivalent to the International Account Standard and further
information can be found in NZ FRS13, the New Zealand Financial Reporting Standard 13. To satisfy these
definitions:
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Research is original and planned investigation undertaken with the prospect of gaining new scientific or
technical knowledge and understanding
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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
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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).
2. Grants
There are three types of grants available which provide funding for research and development (R&D) as
outlined in the Grant Summary table below:
GRANT TYPE
Growth
Grant
SUMMARY DESCRIPTION
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To assist businesses that are experienced R&D performers, to grow their R&D
spend
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Businesses are paid 20% of their total eligible R&D spend up to $25m per year to a
maximum annual payment of $5m
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Businesses must provide an R&D plan when they apply however they have the
flexibility to change plans throughout the duration
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The initial term of the Growth Grant is three years and the applicant may be eligible
for a two year extension.
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To assist businesses to grow their R&D spend over time and become eligible for a
Growth Grant
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For businesses who cannot receive a Growth Grant and are:
Project
Grant
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Undertaking their first R&D
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Expanding their activities.
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Businesses can have multiple Project Grants, each for a distinct R&D project
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Funding is typically 40%; reducing to 20% for larger grants with higher total project
funding.
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To support undergraduate and postgraduate students to gain and develop their
scientific/technical skills in a business that has an on-going R&D programme.
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Support is limited to;
Student
Grant
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Wages, salary or a tax-free stipend
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In some cases a travel allowance may be paid when the business is a
significant distance from the university
Tax-free stipends are paid through the student’s university and the university
receives an administration fee.
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3. Growth Grant
The objective of the Growth Grant is to increase research and development (R&D) spending by businesses
that are experienced in investing in R&D. It is rules based and responsive to business changing needs.
All successful applicants will receive:
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A R&D Growth Grant for three years
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20% of eligible R&D expenditure up to a maximum $25 million in each year
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The maximum grant funding will be $5 million per year.
3.1.
Eligibility Criteria
In addition to the Business Eligibility Criteria described in the Introduction in this document, the business must
fit the requirements in the Growth Grant Eligibility Criteria table below:
GROWTH GRANT ELIGIBILITY CRITERIA
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Have had a minimum of $300,000 in eligible R&D expenditure sourced from non-government funds
in each of the last two financial years
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Have had eligible R&D expenditure of at least 1.5% of their revenue in the last two financial years.
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Meet financial and management due diligence requirements sufficient to justify three years of
funding
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Provide an R&D plan:
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Suitable to assess progress in the business R&D programme; and
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An estimate of R&D expenditures over the next three years.
3.1.1. Transitional Eligibility Criteria
Businesses that have not previously received a R&D Growth Grant and did not meet the R&D spend levels (in
the eligibility criteria table above) in their last two financial years may qualify under the transitional eligibility
criteria.
In addition to the Business Eligibility Criteria described in 3.1 above, the business must meet the
requirements in the Transitional Eligibility Criteria table below:
TRANSITIONAL ELIGIBILITY CRITERIA
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Transitional eligibility criteria will only apply for a business that has not previously received a R&D
Growth Grant
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Has the necessary finance to spend at least $300,000 per year on eligible R&D expenditure
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No funding will be payable unless the business actually reaches both the intended spend levels and
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Intends to spend at least $300,000 per year on eligible R&D expenditure
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Intends to spend at least 1.5% of revenues per year on eligible R&D expenditure within the
first year of the grant
Commits to and provides three monthly progress reports against the R&D plan for the first two years.
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3.2.
Exclusions
Not all expenditure is eligible for the R&D Growth Grant initiative. These exclusions include:
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Any expenditure that is capitalised as an intangible asset
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R&D undertaken outside of New Zealand
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R&D funded through an enforceable levy paid by another entity
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Enforced levies for R&D paid to another entity
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R&D funded by a grant or other payment which has been provided by another entity (excluding R&D
contracted out to another entity)
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Some additional specific activities are excluded and this list is not exhaustive:
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Engineering follow-through in an early phase of commercial production
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Activities relating to;
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-
construction
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relocation
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rearrangement or start-up of facilities or equipment (other than equipment used for R&D only
Routine activities including;
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improvement of an existing product or process
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design changes of existing products
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Activities to ensure compliance with statutory requirements or standards
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Adapting an existing product or process to a customers need
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Improvements to existing computer software
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Market research
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Protecting, licensing, selling or defending intellectual property or acquiring or using external intangible
assets
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Interest expenses or lease payments or overheads not closed linked to R&D
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Prospecting or exploring for minerals, petroleum, natural gas or geothermal energy
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Research in the social sciences, arts or humanities.
3.3.
Extensions
After two years, businesses can apply for a two year extension on the grant. An extension will be granted if
the business:
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Reports expenditure over the previous two years which meets the definition of eligible R&D expenditure
criteria
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Continues to meet the eligibility criteria (transitional eligibility criteria does not apply to extensions)
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Has maintained or increased eligible R&D expenditure over the two years of the grant period as
compared to the two years prior to the grant period.
4. Project Grant
The objective of the Project Grant is to increase Research and Development (R&D) spending of businesses
that are undertaking their first R&D; increasing their R&D activities and those who are ineligible for Growth
Grants.
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Successful applicants:
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4.1.
Will typically receive funding up to 40% of the eligible R&D expenditure of a project reducing for larger
grants to 20% as follows;
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Any eligible R&D beyond the first $800,000 of eligible R&D expenditure of a project (or projects if
the business is receiving multiple R&D Project Grants simultaneously) will be co-funded at 20%
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If a business has previously received an R&D Growth Grant, then they will receive 20% cofunding for the entire Project Grant
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If a business has previously received R&D Project Grants totalling more than $800,000 of funding
they will receive 20% co-funding for the entire Project Grant
May have multiple Project Grants, each for a distinct R&D project.
Collaborative Projects
Businesses that have Growth Grants can only apply for a Project Grant if they undertake a collaborative
project which:
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Involves at least two independent businesses that are undertaking a joint project for mutual benefit
(each party is expected to gain value)
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At least one of the businesses is receiving a Growth Grant
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Each company is contributing financially and technically to the project
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The project structure has shared responsibility and decision-making.
Successful Collaborative applicants:
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Will typically receive co-funding for up to 40% of the eligible R&D expenditure of the collaborative
project
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If a business has an R&D Growth Grant, they will receive a top up of up to 20% on top of that R&D
Growth Grant.
4.2.
Eligibility
In addition to the Business Eligibility Criteria described in the Introduction in this document, the business must
fit the requirements in the Project Grant Eligibility Criteria table below:
PROJECT GRANT ELIGIBILITY CRITERIA
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The business must not be receiving or be eligible to receive a Growth Grant (the exception is a
collaborative R&D Project
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R&D undertaken outside of New Zealand is not eligible for co-funding except in limited cases
determined by:
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Considering the benefits to New Zealand
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Whether similar expertise or facilities are available in New Zealand.
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4.3.
Judgement Criteria
The business proposal will be assessed against the following criteria:
PROJECT GRANT JUDGEMENT CRITERIA
A.
B.
C.
D.
E.
F.
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Assuming the project is successful, what are
the potential commercial returns to the business
(or group)?
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Assuming the technical aspects of the project
are successful, how capable will the business
(or group) be at successfully commercialising or
implementing the results?
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How capable will the business (or group) be at
successfully delivering on the technical aspects
of the project?
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To what extent will the project be a technical
stretch for the business (or group) and/or
contribute to the development of a more stable
and substantial New Zealand-based R&D
programme within the business?
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How strong will the impact of grant funding be
on the delivery, scale, quality or commercial
success of the project?
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How much potential is there for benefit to
accrue outside the business (or group) to other
New Zealand businesses or society?
Private Investment returns
Pathway to market
(commercial outcomes)
Ability to deliver (R&D outputs)
Develop R&D Programme
Grant Impact
Benefits Outside the Business
5. Student Grant
The objective of the Student Grant is to support New Zealand undergraduate and postgraduate students to
gain and develop their technical skills in a business that has an on-going research and development (R&D)
programme.
Successful applicants may receive:
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Wages and salary of the student
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Tax-free stipend for the student
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Tertiary administration fee
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A travel allowance for the student where a business is located a significant distance from the tertiary
education institute.
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5.1.
Eligibility
In addition to the Business Eligibility Criteria described in the Introduction in this document, the business must
fit the requirements in the Student Grant Eligibility Criteria table below:
STUDENT GRANT ELIGIBILITY CRITERIA
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The business must have an active R&D programme
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Ensure that the student:
5.2.
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Is a science, technology, engineering, design or business student from a tertiary education
institution
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Is studying a degree at NZQA levels 7 to 10 or equivalent
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Has appropriate immigration status at the time of application (or an application in progress
that is subsequently approved.
Judgement criteria
Callaghan Innovation is required to assess the Student Grant proposals against the three criteria in the
judgement criteria table below:
STUDENT GRANT JUDGEMENT CRITERIA
G.
Student Exposure to
Research and
Development (R&D)
H.
Student Professional
Development
I.
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How will the internship expose the student to technical
work that is relevant to their degree? This should be in
the form of a defined R&D project
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Does the business have a credible plan for the
professional development of the student, and what
resources have the business committed towards this?
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How will the involvement of the student within the
business support the business’ internal capability
development?
Benefit to the business
6. Clawback
6.1.
Clawback of funding (Project and Growth Grants only)
A business may be expected to return some or all grant funding during or following a grant agreement if:
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The business;
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Breaches any grant agreement
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Misappropriates funding
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Provides incorrect information
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Claims ineligible expenditure
The business enters in to a contract or arrangement (including change of ownership) that materially
reduces the current or future planned research and development (R&D) activity in New Zealand.
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Appendix – Ministerial Direction
CROWN ENTITIES ACT 2004
DIRECTION TO CALLAGHAN INNOVATION – CRITERIA FOR ASSESSING PROPOSALS FOR FUNDING
Under section 103 of the Crown Entities Act 2004, I direct Callaghan Innovation to give effect to Government
policy as specified in this direction.
INTRODUCTION
In this direction I set criteria for Callaghan Innovation to adhere to for assessing proposals for R,S&T funding. This
notice uses the following format:

R,S&T Funding decided by Callaghan Innovation.

Criteria to be applied.

Administrative processes.
R,S&T FUNDING DECIDED BY CALLAGHAN INNOVATION
Funding allocated by Callaghan Innovation may be allocated from any of the following multi-year appropriations:

Research and Development Growth Grants (for Research and Development Growth Grants).

Targeted Business Research and Development Funding (for Research and Development Project Grants and
Research and Development Student Grants).
CRITERIA TO BE APPLIED
Callaghan Innovation must make funding decisions in accordance with:

Public Finance Act 1989

parameters specific to the business-led R&D tool

criteria specific to each initiative within the tool, which are:
o
Policy objectives
o
eligibility criteria
o
judgement criteria (if applicable), and
o
parameters specific to the initiative (if applicable).
In addition to the criteria listed above, Callaghan Innovation must take into account the overall mix of relevant
investments. Detailed criteria specific to each initiative are set out in more detail in the following pages.
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ADMINISTRATIVE PROCESSES
Callaghan Innovation will:

Market the tool and provide easy to access public information explaining its features

actively seek out applicants from inside and outside the group of businesses it currently works with

develop and implement processes for vetting and auditing businesses to ensure that claimed research and
development is legitimate

ensure that applicants and recipients of grants have access to complementary advice and services where
appropriate

gather data on applicants during and following the grant period to support programme evaluation, and

monitor funded businesses’ activities during and after the grant period and seek to claw-back (recover)
funding as appropriate. Callaghan Innovation is expected to implement claw-back mechanisms.
Callaghan Innovation may issue standing or periodic calls to generate proposals for consideration. The calls for
proposals will be consistent with the criteria in this direction, and will provide guidance for applicants. This
guidance may include, where applicable:

The area(s) of investment in which a funding decision is required

more detail as to how the criteria in this notice apply to the area of investment

the tool (or initiative within the tool) to be used

the amount of funding available

specific outcomes sought for a given investment process or decision, and

other timeline and process information.
Calls for proposals will be published on the Callaghan Innovation website:
http://www.callaghaninnovation.govt.nz
REVOCATION OF PREVIOUS NOTICE
The notice entitled Direction to Callaghan Innovation—Criteria for Assessing Proposals for Funding, published in
the New Zealand Gazette, 31 October 2013, No. 146, page 3990, is revoked.
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Criteria Specific to Business-led R&D Tool
OVERALL POLICY OBJECTIVE
The objective of this tool is to increase New Zealand businesses’ investment in research and development to
support long-term economic growth.
INITIATIVES
Three initiatives sit within the business-led R&D tool.
1.
Research and Development Growth Grants.
2.
Research and Development Project Grants.
3.
Research and Development Student Grants.
BUSINESS ELIGIBILITY CRITERIA
To be eligible for funding under this tool the following criteria must be satisfied together with the eligibility criteria
relevant to the specific initiative.

Only businesses are eligible to receive funding via this tool. A business or group of businesses may nominate a
representative to receive funding.

A business must be one of the following entities:
o
A Company registered under the Companies Act 1993; or
o
a Limited Partnership registered under the Limited Partnerships Act 2008; or
o
A Maori incorporation or a trust established under Te Ture Whenau Māori Act 1993, a trust established
on behalf of Māori claimants to receive and manage assets as part of the settlement of a claim under the
Treaty of Waitangi, a Māori statutory body, or a business that is controlled by one or more of these
types of Māori entities.

Businesses may not be an entity established in schedule 1 of the State Owned Enterprises Act 1986 or listed in
schedule 4A of the Public Finance Act 1989 or 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.

Callaghan Innovation must be satisfied that providing an R&D grant to the business would not bring the
reputation of Callaghan Innovation or the R&D grants programme into disrepute.
CLAWBACK PROVISIONS
Businesses may be expected to return some or all grant funding, during or following a grant agreement, to
Callaghan Innovation, if:

The business breaches any grant agreement, misappropriates funding, provides incorrect information to
Callaghan Innovation, or claims ineligible expenditure; or

the business enters into a contract or arrangement (including change of ownership) that materially reduces the
current or future planned research and development activity in New Zealand; or

the grant fund is unspent and for which contractual liabilities have not yet been incurred.
Criteria relating to each initiative are set out in the following sections.
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1.
Research and Development (R&D) Growth Grants
POLICY OBJECTIVE
The objective of this initiative, in addition to the overall policy objective of the business-led R&D tool, is to provide a
rule-based, market-led incentive for increasing R&D investment in businesses that are experienced in investing in
R&D.
ELIGIBILITY CRITERIA
In addition to the BUSINESS ELIGIBILITY CRITERIA stated earlier, to be eligible to receive funding a business
must:

Have had at least $300,000 in eligible R&D expenditure (stated below) excluding any R&D funded by Callaghan
Innovation, MBIE and other New Zealand central government funding sources, in each of the two most recent
years; and

have had eligible R&D expenditure of at least 1.5 per cent of revenues in each of the two most recent years; and

meet financial and management due diligence requirements sufficient to justify three years of funding; and

provide Callaghan Innovation with a R&D plan including an estimate of R&D expenditures over the next three
years. Businesses must compile the R&D plan level of detail and clarity sufficient to assess progress in the
businesses’ R&D programme over time.
Alternatively, a business that has not previously received a R&D Growth Grant may be eligible under the transitional
eligibility criteria (stated below).
For R&D projects that were partially funded by government grants, the funding for the project that came from nongovernment sources is considered eligible R&D expenditure for the purpose of determining business eligibility.
While eligibility requires that applicants submit a R&D plan, the merits of the R&D programme described in the plan
will not influence eligibility.
Entries that conduct or commission R&D activities mainly for other persons or businesses are likely to be ineligible
due to insufficient eligible R&D expenditure.
PARAMETERS SPECIFIC TO THIS INITIATIVE
All eligible applicants will receive an R&D Growth Grant for three years. Grant holders will receive up to 20 per cent
of all eligible R&D expenditures incurred over the grant period up to a maximum of $25 million of eligible
expenditures per business, per year (maximum grant funding of $5 million per business per year).
Businesses will be required to submit annual updates to their R&D plan and estimates. These plans must continue to be
sufficiently detailed and clear.
Any business receiving an R&D Growth Grant found to be wilfully misreporting R&D expenditure at any point will
be immediately removed from the initiative and will be ineligible to reapply for three years.
PARAMETERS SPECIFIC TO THIS INITIATIVE - EXTENSIONS
Two years into the grant period, grant holders will have the option of applying for a two-year extension on the grant.
Grant holders will receive an extension if:

The business’ reported expenditure over the previous two years is found to meet the definition of eligible R&D
expenditure (stated below);

the business continues to meet the eligibility criteria, and

the business has maintained or increased eligible R&D expenditure over the two years of the grant period as
compared to the two years prior to the grant period.
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If the business has reduced eligible R&D expenditure but meets the other requirements, the Callaghan Innovation
Board may still choose to grant the business an extension at its discretion. The Board should only do so in
exceptional circumstances.
Businesses may continue to apply for, and receive, extensions every two years provided they continue to meet the
requirements.
Businesses that fail to receive an extension will receive a final year of grant funding and subsequently exit the
initiative. Businesses that exit the initiative are not eligible le to apply for another R&D Growth Grant for two
years.
ELIGIBILITY CRITERIA (TRANSITIONAL)
Transitional eligibility criteria will only apply for a business that has not previously received a R&D Growth Grant.
No funding is payable by Callaghan Innovation unless the business actually reaches both the intended spend levels
of at least $300,000 per year on eligible R&D expenditure and at least 1.5 per cent of revenues per year on eligible
R&D expenditure within the first year of the grant.
Notwithstanding the above ELIGIBLITY CRITERIA for R&D Growth Grants, and in addition to the BUSINESS
ELIGIBILITY CRITERIA stated earlier, a business may be eligible to receive funding if the business:

Intends to spend at least $300,000 per year on eligible R&D expenditure (stated below);

has the necessary finance to spend at least $300,000 per year on eligible R&D expenditure;

intends to spend at least 1.5 per cent of revenues per year on eligible R&D expenditure;

meets financial and management due diligence requirements sufficient to justify three years of funding;

provides Callaghan Innovation with a R&D plan including an estimate of R&D expenditures over the next
three years.
Businesses must compile the R&D plan level of detail and clarity sufficient to assess progress in the businesses’
R&D programme over time; and commit to and provide 3-monthly progress reports on Callaghan Innovation
against the R&D plan for the first two years. If the business does not achieve the intended spend levels within the
first year of the grant, it will receive no funding and exit the initiative. The business will be ineligible to reapply for
another R&D Growth Grant for two years.
DEFINITION OF ELIGIBLE RESEARCH AND DEVELOPMENT EXPENDITURES FOR R&D GROWTH
GRANTS
Eligible R&D expenditure is defined as those meeting the New Zealand Equivalent to International Account
Standard 38 (NZ IAS 38) definition of research and development and expensed under the standard.
The NZ IAS 38 definitions of R&D are:

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.
Clarifying Principle
If necessary, when seeking to distinguish R&D from non R&D, the further advice provided by the New Zealand
Financial Reporting Standard 13 (NZ FRS 13) should be applied:

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.
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General exclusions
The following types of expenditure are not eligible for the R&D Growth Grants initiative:

Any expenditure that is capitalised as an intangible asset under NZ IAS 38

R&D undertaken outside of New Zealand

R&D funded through an enforceable levy paid by another entity

enforceable levies for R&D paid to another entity, and

any R&D funded by a grant or other payment provided by an entity that is not part of the same consolidated
group of entities as the applicant. However, R&D funded by the R&D Growth Grant, an R&D Project Grant
that the business receives for a collaborative R&D Project or an R&D Student Grant is eligible. Expensed
funding for R&D contracted out by the applicant to another entity is also eligible.
Specific exclusions
To provide further clarification on the definition, some specific activities are excluded. This list is not exhaustive.
Activities not specifically excluded are only eligible provided they meet all other features of the definition. Specific
activities excluded are:

Engineering follow-through in an early phase of commercial production

Activities related to the construction, relocation, rearrangement or start-up of facilities or equipment other than
facilities or equipment solely used for the businesses’ R&D (which may be included)

Routine, on-going efforts to refine, enrich, or otherwise improve on the qualities of an existing product or
process, or to make cosmetic or stylistic changes to it

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 (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.
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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 on 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
the project structure indicates the project has shared responsibility and decision-making.
PARAMETRES 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 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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
if a business has received an R&D Growth Grant then they will receive 20 per cent funding of eligible R&D
expenditure for the entire Project Grant

if a business has previously received R&D Project Grants totally more than $800,000 of funding they will
receive 20 per cent co-funding for the entire Project Grant

collaborative R&D projects will typically receive co-funding for up to 40 per cent of the eligible R&D
expenditure of the collaborative project. However, if a business with an R&D Growth Grant contributes to a
collaborative R&D project they will only receive co-funding for a maximum of 20 per cent of their eligible
R&D expenditure on top of their R&D Growth Grant.
JUDGEMENT CRITERIA
Callaghan Innovation must assess proposals against the following criteria:
A. Private Investment Returns
B. Pathway to market (commercial outcomes)
Key Question: Assuming the project is successful,
what are the potential commercial returns to the
business (or group of businesses)?
Key Question: Assuming the technical aspects of the
project are successful, how capable will the business
(or group of businesses) be at successfully
commercialising or implementing the results?
C. Ability to deliver (R&D outputs)

D. Develop R&D Programme
Key question: How capable will the business (or
group of businesses) be at successfully delivering on
the technical aspects of the project?
Key question: To what extent will the project be a
technical stretch for the business (or group of
businesses) and/or contribute to the development of a
more stable and substantial New Zealand-based R&D
programme within the business (or group of
businesses)?
E. Grant Impact
F. Benefits Outside the Business
Key question: How strong will the impact of grant
funding be on the delivery, scale, quality or
commercial success of the project?
Key question: How much potential is there for benefit
to accrue outside the business (or group of businesses)
to other New Zealand businesses or society?
Criteria A-F must be the basis upon which Callaghan Innovation determines whether to provide a grant for a
project.
INFORMATION SPECIFIC TO THIS INITIATIVE

R&D Project Grants are targeted at businesses that cannot receive an R&D Growth Grant, for example,
businesses with smaller research and development programmes and businesses new to R&D.

a business may receive multiple R&D Project grants (each grant for a distinct project).
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3.
Research and Development (R&D) Student Grants
POLICY OBJECTIVE
The objective of this initiative, in addition to the overall policy objective of the business-led R&D tool, is to
support New Zealand undergraduate and postgraduate students to gain and develop their technical skills in a
commercial research environment, while bringing capability into New Zealand businesses.
ELIGIBILITY CRITERIA
In addition to the BUSINESS ELIGIBILITY CRITERIA stated earlier, to be eligible to receive funding under this
initiative, a business must:

Have an active R&D programme

ensure that the student(s) that the grant relates to:
o
is a science, technology, engineering, design or business student from a tertiary education institution;
and
o
is studying a degree at NZQA levels 7 to 10 or equivalent; and
o
has appropriate immigration status at the time of application (or an application in progress that is
subsequently approved).
DEFINITION OF ELIGIBLE RESEARCH AND DEVELOPMENT EXPENDITURE FOR STUDENT GRANTS
The eligible expenditure that may be incurred are limited to wages and salary of the student, a tax-free stipend for
the student, a University administration fee and, when the business is located a significant distance from the tertiary
institute, a travel allowance for the student.
JUDGEMENT CRITERIA
Callaghan Innovation must assess proposals against the following criteria:
A. Student Exposure to
R&D
B. Student Professional
Development
C. Benefit to the Business
Key Question: How will the
involvement of the student
within the business expose
them to technical work that is
relevant to their degree? This
should be in the form of a
defined R&D project.
Key Question: Does the business
have a credible plan for the
professional development of the
student, and what resources has the
business committed towards this?
Key Question: How will the
involvement of the student within
the business support the business’
internal capability development?
HON STEVEN JOYCE, Minister of Science and Innovation Dated:
1/12/15
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