Tax de­duc­tions for SA-based R&D

Finweek English Edition - - Spoor & fisher - COPY: Amanda Ver­meulen AD­VER­TIS­ING: Joey van Dyk

SOUTH AFRICA’S GOV­ERN­MENT is try­ing to en­cour­age re­search and de­vel­op­ment ac­tiv­i­ties by an­nounc­ing far-reach­ing amend­ments to the In­come Tax Act.

The amend­ments pro­vide for a tax de­duc­tion of up to 150% for ex­pen­di­ture on R&D ac­tiv­i­ties un­der­taken in SA. The amend­ments set out var­i­ous cat­e­gories of R&D work that qual­ify for the de­duc­tion. How­ever, in broad terms, if the R&D is of a sci­en­tific or tech­no­log­i­cal na­ture al­most all cat­e­gories of ex­pen­di­ture in­curred are tax de­ductible.

“That would even in­clude funds spent on plant and equip­ment,” says Chris Bull, chair­man of the ex­ec­u­tive at Spoor & Fisher.

“From an in­tel­lec­tual prop­erty per­spec­tive it’s im­por­tant to note that all pa­tent and in­tel­lec­tual prop­erty costs in­curred re­lat­ing to the R&D are de­ductible.

The rea­son­ing is that Gov­ern­ment is try­ing to en­cour­age busi­nesses en­gaged in R&D to pro­tect the con­cepts and in­ven­tions de­vel­oped through re­search work.”

Bull says cer­tain R&D cat­e­gories don’t qual­ify for the de­duc­tion, such as ex­plo­ration and prospect­ing, R&D re­lated to man­age­ment and in­ter­nal busi­ness pro­cesses, trade­marks, work con­cern­ing so­cial sci­ences and hu­man­i­ties and mar­ket re­search, sales and mar­ket­ing pro­mo­tion.

“It’s also im­por­tant to note that where the R&D is funded by Gov­ern­ment grants the 150% de­duc­tion will only be al­lowed where the ex­pen­di­ture ex­ceeds twice the amount of the Gov­ern­ment grant.”

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.