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IN 48 (2) Income Tax acT: InTeRPReTaTIon noTes IN 50
5. Conclusion
The sale of trading stock under an instalment credit agreement could be subject to section 24(1) which determines that the whole amount should be deemed to be included in gross income at the time that the agreement is entered into. For purposes of section 24, the expression ‘the whole of that amount’ must exclude nance charges and VAT and will therefore be the sum total of capital instalments.
Taxpayers entering into an instalment credit agreement that are subject to section 24(1) may claim a debtors’ allowance if the requirements under section 24(2) are met. The granting of the debtors’ allowance is at the discretion of the Commissioner. Taxpayers must use one of the methods detailed in this Note to calculate the gross pro t percentage that should be used to determine the debtors’ allowance. The method chosen must be consistently applied since SARS will not accept a taxpayer switching between methods in an attempt to exploit the allowance.
Legal and Policy Division
SOUTH AFRICAN REVENUE SERVICE Date of 1st issue : 28 July 2009
Income Tax Interpretation Note 50
Income Tax: Deduction for Scienti c or Technological Research and Development
DATE: ACT: SECTION: SUBJECT:
28 August 2009
INCOME TAX ACT 58 OF 1962 (the Act)
Section 11D
Deduction for Scienti c or Technological Research and Development
Preamble
1. Status of this Interpretation Note
2. Purpose
3. Background
PART 1: DEDUCTION OF EXPENDITURE 4. The law — section 11D (1)
4.1 Entitlement to the incentive
4.2 Qualifying R&D activities
4.2.1 Discovery of novel, practical and non-obvious information
4.2.2 Invention as de ned in section 2 of the Patents Act 57 of 1978 (‘the Patents Act’)
4.2.3 Design as de ned in section 1 of the Designs Act 195 of 1993 (‘the Designs Act’)
4.2.4 Computer program
4.2.5 Knowledge essential to the use of such invention, design or computer program
4.3 Requirements
4.3.1 Carrying on any trade
4.3.2 Expenditure actually incurred by the taxpayer
PART 2: DEPRECIATION ALLOWANCE
5.
5.1
5.2
5.3
PART 3: EXCLUSIONS AND LIMITATIONS
6. The law — sections 11D (5), (5A), (5B) and (6) 6.1 Excluded activities
CONTENTS
The law — section 11D (2), (3) and (4)
Eligible asset
Meaning of ‘cost to the taxpayer’ — section 11D (3)
The building or any part thereof must be regularly used and speci cally equipped — section 11D (4)
6.1.1 Exploration or prospecting
6.1.2 Management or internal business processes 6.1.3 Trade marks
6.1.4 The social sciences or humanities
6.1.5 Market research, sales or marketing promotion
6.2 Excluded expenditure — section 11D (5A)
6.3 Limitation of expenditure — section 11D (5B)
6.4 Option/election — section 11D (6)
6.5 Amount other than government grant received or accrued to fund expenditure — section 11D (7)
6.5.1 The law — section 11D (7)
6.6 Government grant received or accrued to fund R&D expenditure — section 11D (8)
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