Article by listed accountant TYRONNE NEL
Research and Development Tax Incentive – why is this not common knowledge?
Over the past few months we have spent quite a bit of time working with “start up” clients. Besides all the fantastic ideas we have been exposed to, the thing that has stood out most for us, is the complete unawareness of the R & D Tax Incentive that all them would have qualified for.
If, at this point, you too are scratching your head, fear not as all is about to be revealed over the next few paragraphs.
The Taxation Laws Amendment Act 2011 introduced specific enhancements to the existing scientific and or technological research and development (R & D) tax incentive provided for under Section 11D of the Income Tax Act. These changes are effective from 1 October 2012.
A company undertaking R&D in the Republic of South Africa qualifies for a 150% tax deduction of its operational R & D expenditure. This incentive is available to businesses of all sizes in all sectors of the economy that are registered in South Africa.
All the eligible R & D expenditure will qualify for an automatic 100% tax deduction. An additional 50% uplift applies to expenditures on R & D activities that have been approved by the Minister of Science and Technology, based on the provisions of Section 11D of the Income Tax Act.
The incentive is aimed at encouraging businesses to undertake and invest in R & D in SouthAfrica. The objective is to help companies build capabilities to create new products, processes, devices and techniques, and / or significantly improve existing ones. This incentive is part of a package of measures that the government of South Africa has introduced to support R & D led innovation, industrial development and competitiveness.
In order to qualify for the incentive, it is very important that you submit your application before you begin with your R & D as only work undertaken from the date of submission is eligiable for the incentive.
At Phezulu we do more than just mentor clients in business incentives, we are in fact your one stop SME shop, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration, Payroll and Mentoring.
For more information please visit our website www.phezulu.net or give me a call 010 003 8558