When Is Research & Development Tax Deductable?

The South African government introduced Section 11D of the Income Tax Act number 58 of 1962 to encourage and incentivise private sector investment towards the research and development of scientific or technological activities. The Act assists in ensuring that research and development activities are conducted within South Africa, and this will ultimately resulting in a positive economic growth. Section 11D of the Act provides for two types of incentives - a 150 percent deduction of operating expenses and accelerated depreciation of any building or part thereof, machinery, plant, implements, utensil or article.

However, a taxpayer has to meet various requirements relating to the taxpayer, the particular expenditure and the research and development activities. The particular activity must also advance scientific or technological knowledge general. Furthermore, the requirements state that the taxpayer must operate a trade and must intend to apply the research and