New criteria for R&D grants now available

23 JULY, 2013

The Minister for Business Innovation and Employment, the Honourable Steven Joyce has announced new criteria for business R&D grants.

New criteria for business R&D Grants that will allow more Kiwi businesses to access more than half a billion dollars’ worth of R&D funding assistance have been released today.

The new Callaghan Innovation grants –

  • R&D Growth Grants,
  • R&D Project Grants, and
  • R&D Students Grants

were announced in Budget 2013. Budget increases of $98 million mean that a total of $566 million is now available over four years ($141.5 million a year) to encourage innovation through Callaghan Innovation’s business research and development grant schemes.

“Business innovation is crucial for New Zealand companies to be internationally competitive,” Science and Innovation Minister Steven Joyce says.

“Our most successful exporters are generally the most innovative and these new grants will mean more Kiwi firms will be eligible allowing them to invest more in R&D so they can compete more effectively in overseas markets.”

The new grants replace the previous

  • Technology Development Grants,
  • TechNZ Project Grants,
  • TechNZ Capability Grants, and
  • Technology Transfer Vouchers.

When the Government reviewed the schemes in 2012, businesses asked us for a simpler approach that provided greater certainty. The revised grant schemes respond to this,” Mr Joyce says.

A condition of the grants will be that businesses will be expected to return some or all grant funding if they enter into a contract or arrangement – including change of ownership – that materially reduces their R&D activity in New Zealand,” Mr Joyce says.

The increased government expenditure in business R&D will help incentivise real progress towards the Government’s goal of business R&D expenditure reaching 1 per cent of GDP”.

A summarised version of the full criteria follows with the full version available at http://www.callaghaninnovation.govt.nz/about-us/key-documents

Criteria Specific to the Business-led R&D Tool

To be eligible for funding under this tool the following criteria must be satisfied together with the eligibility criteria relevant to the specific initiative:

A business must have a least one director who is resident in NZ and at least one of the following must be true:

  • The business is incorporated in NZ
  • The business has a centre of management in NZ
  • The business has a head office in NZ.

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.
  1. Research and Development (R&D) Growth Grants

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) sourced from non-government funds 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 an R&D plan including an estimate of R&D expenditures over the next three years. Businesses must compile the R&D plan to a level of detail and clarity sufficient to assess progress in the businesses’ R&D programme over time.

For R&D projects that were partially funded by government grants, the funding for the project that came from non-government sources is considered eligible R&D expenditure for the purpose of determining business eligibility.

While eligibility requires that applicants submit an R&D plan, the merits of the R&D programme described in the plan will not influence eligibility.

Entities that conduct or commission R&D activities mainly for other persons or businesses are likely to be ineligible due to insufficient eligible R&D expenditures.

PARAMETERS SPECIFIC TO THIS INITIATIVE

All eligible applicants will receive a 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 that is 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 non-government funded eligible R&D expenditure over the two years of the grant period as compared to the two years prior to the grant period.

If the business has reduced non-government funded 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 to apply for another R&D Growth Grant for two years.

2.   Research and Development (R&D) Project Grants

ELIGIBILITY CRITERIA

To be eligible for funding under this initiative the following criteria must be satisfied:

  • Only businesses are eligible to receive funding via this initiative. A business or group of businesses may nominate a representative to receive funding.
  • A business must have a least one director who is resident in NZ and at least one of the following must be true:
    • The business is incorporated in NZ
    • The business has a centre of management  in NZ, or
    • The business has a head office in NZ.

RELATIONSHIP WITH R&D GROWTH GRANTS

Businesses that receive a R&D Growth Grant will only be eligible for R&D Projects Grants if they undertake 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)
  • At least one of the businesses is receiving a R&D Growth Grant
  • 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.

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 30-50 per cent of the eligible R&D expenditure of a project.
  • Collaborative R&D projects will only receive funding for 15-30 per cent of the R&D eligible expenditure on top of the R&D Growth Grant. If one of the contributing businesses does not have an R&D Growth Grant, the R&D Project Grant will typically provide funding for 30-50 per cent of their eligible expenditure.
  • Callaghan Innovation must ensure the total annual funding allocated to all R&D Project Grants does not exceed 40 per cent of eligible expenditure

3.   Research and Development (R&D) Student Grants

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:
    • is a science, technology, engineering, design or business student from a tertiary education institution; and
    • is studying a degree at NZQA levels 7 to 10 or equivalent; and
    • has appropriate immigration status at the time of application (or an application in progress that is subsequently approved).

DEFINITION OF ELIGIBLE EXPENDITURE FOR R&D STUDENT GRANTS

The eligible expenditure that may be incurred is limited to wages and salary of the student, a tax-free stipend for the student, a tertiary administration fee and, when the business is located a significant distance from the tertiary education institute, a travel allowance for the student.

If you’d like to know more about these new Grants, please contact The Resources Guys :TRG at info@trg.co.nz.