Tax Incentives - Research & Developement

In terms of Section 11D of the Income Tax Act there are 2 types of tax incentives available, in respect of research & developement(R&D) expenditure incurred in the pursuit of certain qualified activities.

Qualified activities must be scientific or technical in nature and intended to be used by the taxpayer in the production of income.

These incentives are:

• A deduction of 150% of the expense of qualified R&D activities

• An accelerated allowance in respect of assets (including buildings) used for qualified R&D activities. In terms of this incentive 50% of the asset's cost may be claimed in the first year of use of the asset and thereafter 30% for the second year and 20% for the third year.

Members who may be involved in R&D should remind their accountants of the attractive incentives provided for in the Act. The above is a very brief outline of the incentives available. Members should ensure that professional tax advice is received before claiming R&D the incentives.

Greg Beykirch
Finance Manager

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