Research and Development – Glossary of Terms

1. Science is the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines.
2. Mathematical techniques are frequently used in science. From April 2023 mathematical advances in themselves are treated as science for the purposes of these Guidelines, whether or not they are advances in representing the nature and behaviour of the physical and material universe.
3. These Guidelines apply equally to work in any branch or field of science.

1. Technology is the practical application of scientific principles and knowledge, where ‘scientific’ is based on the definition of science above.
2. These Guidelines apply equally to work in any branch or field of technology.

A project consists of a number of activities conducted to a method or plan in order to achieve an advance in science or technology. It is important to get the boundaries of the project correct. It should encompass all the activities which collectively serve to resolve the scientific or technological uncertainty associated with achieving the advance, so it could include a number of different sub-projects. A project may itself be part of a larger commercial project, but that does not make the parts of the commercial project that do not address scientific or technological uncertainty into R&D.

1. Overall knowledge or capability in a field of science or technology means the knowledge or capability in the field which is publicly available or is readily deducible from the publicly available knowledge or capability by a competent professional working in the field. Work which seeks an advance relative to this overall knowledge or capability is R&D.
2. Overall knowledge or capability in a field of science or technology can still be advanced (and hence R&D can still be done) in situations where:
   • several companies are working at the cutting edge in the same field, and are doing similar work independently; or
   • work has already been done but this is not known in general because it is a trade secret, and another company repeats the work; or
   • it is known that a particular advance in science or technology has been achieved, but the details of how are not readily available.
3. However, the routine analysis, copying or adaptation of an existing process, material, device, product or service will not advance overall knowledge or capability, even though it may be completely new to the company or the company’s trade.

1. Appreciable improvement means to change or adapt the scientific or technological characteristics of something to the point where it is ‘better’ than the original. The improvement should be more than a minor or routine upgrading, and should represent something that would generally be acknowledged by a competent professional working in the field as a genuine and non-trivial improvement. Improvements arising from the adaptation of knowledge or capability from another field of science or technology are appreciable improvements if they would generally be acknowledged by a competent professional working in the field as a genuine and non-trivial improvement.
2. Improvements which arise from taking existing science or technology and deploying it in a new context (e.g. a different trade) with only minor or routine changes are not appreciable improvements. A process, material, device, product or service will not be appreciably improved if it simply brings a company into line with overall knowledge or capability in science or technology, even though it may be completely new to the company or the company’s trade.
3. The question of what scale of advance would constitute an appreciable improvement will differ between fields of science and technology and will depend on what a competent professional working in the field would regard as a genuine and non-trivial improvement.

1. To directly contribute to achieving an advance in science or technology, an activity (or several activities in combination) must attempt to resolve an element of the scientific or technological uncertainty associated with achieving the advance.
2. Activities which directly contribute to R&D include:
   a) activities to create or adapt software, materials or equipment needed to resolve the scientific or technological uncertainty, provided that the software, material or equipment is created or adapted solely for use in R&D;
   b) scientific or technological planning activities; and
   c) scientific or technological design, testin g and analysis undertaken to resolve the scientific or technological uncertainty.
3. Activities which do not directly contribute to the resolution of scientific or technological uncertainty include:
   a) the range of commercial and financial steps necessary for innovation and for the successful development and marketing of a new or appreciably improved process, material, device, product or service;
   b) work to develop non-scientific or non-technological aspects of a new or appreciably improved process, material, device, product or service;
   c) the production and distribution of goods and services;
   d) administration and other supporting services;
   e) general support services (such as transportation, storage, cleaning, repair, maintenance and security); and
   f) qualifying indirect activities.

1. System uncertainty is scientific or technological uncertainty that results from the complexity of a system rather than uncertainty about how its individual components behave. For example, in electronic devices, the characteristics of individual components or chips are fixed, but there can still be uncertainty about the best way to combine those components to achieve an overall effect. However, assembling a number of components (or software sub-programs) to an established pattern, or following routine methods for doing so, involves little or no scientific or technological uncertainty.
2. Similarly, work on combining standard technologies, devices, and/or processes can involve scientific or technological uncertainty even if the principles for their integration are well known. There will be scientific or technological uncertainty if a competent professional working in the field cannot readily deduce how the separate components or sub-systems should be combined to have the intended function.

1. These are activities which form part of a project but do not directly contribute to the resolution of the scientific or technological uncertainty. They are:
   a) scientific and technical information services, insofar as they are conducted for the purpose of R&D support (such as the preparation of the original report of R&D findings);
   b) indirect supporting activities such as maintenance, security, administration and clerical activities, and finance and personnel activities, insofar as undertaken for R&D;
   c) ancillary activities essential to the undertaking of R&D (e.g. taking on and paying staff, leasing laboratories and maintaining research and development equipment including computers used for R&D purposes);
   d) training required to directly support an R&D project;
   e) research by students and researchers carried out at universities;
   f) research (including related data collection) to devise new scientific or technological testing, survey, or sampling methods, where this research is not R&D in its own right; and
   g) feasibility studies to inform the strategic direction of a specific R&D activity.
2. Activities not described in paragraph 31 are not qualifying indirect activities.

1. R&D begins when work to resolve the scientific or technological uncertainty starts, and ends when that uncertainty is resolved or work to resolve it ceases. This means that work to identify the requirements for the process, material, device, product or service, where no scientific or technological questions are at issue, is not R&D.
2. R&D ends when knowledge is codified in a form usable by a competent professional working in the field, or when a prototype or pilot plant with all the functional characteristics of the final process, material, device, product or service is produced.
3. Although the R&D for a process, material, device, product or service may have ended, new problems which involve scientific or technological uncertainty may emerge after it has been turned over to production or put into use. The resolution of these problems may require new R&D to be carried out. But there is a distinction to be drawn between such problems and routine fault fixing.

1. Scientific or technological planning activities associated with a project directly contribute to resolving the scientific or technological uncertainty associated with the project, and are therefore R&D. These include defining scientific or technological objectives, assessing scientific or technological feasibility, identifying particular scientific or technological uncertainties, estimating development time, schedule, and resources of the R&D, and high-level outlining of the scientific or technical work, as well as the detailed planning and management of the work.
2. Elements of a company’s planning activity relating to a project but not directly contributing to the resolution of scientific or technological uncertainty, such as identifying or researching market niches in which R&D might benefit a company, or examination of a project’s financial, marketing, and legal aspects, fall outside the category of scientific or technological planning, and are therefore not R&D

Not all projects succeed in their aims. What counts is whether there is an intention to achieve an advance in science or technology, not whether ultimately the associated scientific or technological uncertainty is completely resolved, or resolved to the degree intended. Scientific or technological planning activities associated with projects which are not taken forward (e.g. because of insurmountable technical or commercial challenges) are still R&D

1. A prototype is an original model on which something new or appreciably improved is patterned, and of which all things of the same type are representations or copies. It is a basic experimental model possessing the essential characteristics of the intended process, material, device, product or service. The design, construction, and testing of prototypes generally fall within the scope of R&D for tax purposes. But once any modifications necessary to reflect the test findings have been made to the prototypes, and further testing has been satisfactorily completed, the scientific or technological uncertainty has been resolved and further work will not be R&D.
2. Similarly the construction and operation of pilot plants while assessing their operations is R&D until the scientific or technological uncertainty associated with the intended advance in science or technology has been resolved.

When achieving design objectives requires the resolution of scientific or technological uncertainty within a project, work to do this will be R&D. Design activities which do not directly contribute to the resolution of scientific or technological uncertainty within a project are not R&D.

Cosmetic and aesthetic qualities are not of themselves science or technology, and so work to improve the cosmetic or aesthetic appeal of a process, material, device, product or service would not in itself be
R&D. However, work to create a desired cosmetic or aesthetic effect through the application of science or technology can require a scientific or technological advance, and resolving the scientific or technological uncertainty associated with such a project would therefore be R&D.

Information or other content which is delivered through a scientific or technological medium is not of itself science or technology. However, improvements in scientific or technological means to create, manipulate and transfer information or other content can be scientific or technological advances, and resolving the scientific or technological uncertainty associated with such projects would therefore be R&D.