A 150% supercharged tax deduction on qualifying expenditure is available via the R&D Tax Incentive which is contained in the Income Tax Act. The deduction is available to companies who are undertaking R&D which has been pre-approved by the Department of Science and Innovation.
The R&D Tax Incentive
CAN I CLAIM
The R&D Tax Incentive provides an additional 50% tax deduction on qualifying expenditure. The effective result is a 14% after-tax benefit on all qualifying expenditure. There is no limit on how much can be claimed.
WHAT IS FUNDED
The incentive can be claimed on all directly attributable R&D costs (excluding items of a capital nature) with certain exceptions.
Examples of qualifying expenditure include:
- Salaries and wages;
- Contractors and sub-contractors; and
- Prototypes and pilot plants.
WHERE MUST I
The R&D Tax Incentive can be claimed on R&D work being undertaken within South Africa.
WHO IS FUNDED
All South African companies are eligible for the R&D Tax Incentive.
The R&D Tax Incentive is jointly administered by the Department of Science and Innovation and the South African Revenue Service who oversee the eligibility of the R&D activities and expenditure respectively.