Page 128 - SAIT Compendium 2016 Volume1

s 11D INCOME TAX ACT 58 OF 1962 s 11D
(b) development of internal business processes unless those internal business processes are mainly intended for sale or for granting the use or right of use or permission to use thereof to persons who are not connected persons in relation to the person carrying on that research and development;
[Para. (b) substituted by s. 18 (1) (d) of Act 43 of 2014 – date of commencement: 20 January 2015.]
(c) market research, market testing or sales promotion;
(d) social science research, including the arts and
humanities;
(e) oil and gas or mineral exploration or prospecting
except research and development carried on to develop
technology used for that exploration or prospecting;
(f) the creation or development of nancial instruments
or nancial products;
(g) the creation or enhancement of trademarks or
goodwill; or
(h) any expenditure contemplated in section 11 (gB) or
(gC).
[Sub-s. (1) substituted by s. 13 (1) (a) of Act 8 of 2007,
amended by s. 19 (1) of Act 60 of 2008 and substituted by s. 32 (1) of Act 24 of 2011 and by s. 29 (1) (a) of Act 31 of 2013 – date of commencement: 1 January 2014; the substituted subsection applies in respect of expenditure incurred in respect of research and development on or after that date, but before 1 October 2022.]
(2) (a) For the purposes of determining the taxable income of a taxpayer that is a company in respect of any year of assessment there shall be allowed as a deduction from the income of that taxpayer an amount equal to 150 per cent of so much of any expenditure actually incurred by that taxpayer directly and solely in respect of the carrying on of research and development in the Republic if—
[Words preceding sub-para. (i) substituted by s. 18 (1) (e) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2014; the substitution applies iro expenditure incurred iro research and development on or after that date, but before 1 October 2022.]
(i) that expenditure is incurred in the production of income;
(ii) that expenditure is incurred in the carrying on of any trade;
(iii) that research and development is approved in terms of subsection (9); and
(iv) that expenditure is incurred on or after the date of receipt of the application by the Department of Science and Technology for approval of that research and development in terms of subsection (9).
(b) No deduction may be allowed under this subsection in respect of expenditure incurred in respect of—
(i) immovable property, machinery, plant, implements, utensils or articles excluding any prototype or pilot plant created solely for the purpose of the process of research and development and that prototype or pilot plant is not intended to be utilised or is not utilised for production purposes after that research and develop- ment is completed;
(ii) nancing, administration, compliance and similar costs.
[Sub-s. (2) substituted by s. 13 (1) (b) of Act 8 of 2007, amended by s. 11 (c) of Act 3 of 2008 and substituted by s. 16 of Act 17 of 2009, by s. 32 (1) of Act 24 of 2011 and by s. 29 (1) (a) of Act 31 of 2013 – date of commencement: 1 January 2014; the substituted subsection applies in respect of expenditure incurred in respect of research and development on or after that date, but before 1 October 2022.]
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(2A) . . .
[Sub-s. (2A) inserted by s. 20 (1) of Act 7 of 2010 and omitted by s. 32 (1) of Act 24 of 2011 – commencement date: 1 October 2012. See also footnote at sub-s. (10).]
(3) . . .
[Sub-s. (3) substituted by s. 13 (1) (b) of Act 8 of 2007, amended by s. 19 (1) (c) of Act 35 of 2007, substituted by s. 16 of Act 17 of 2009 and by s. 32 (1) of Act 24 of 2011 and deleted by s. 29 (1) (b) of Act 31 of 2013 – date of commencement: 1 January 2014; the deletion applies in respect of expenditure incurred in respect of research and development on or after that date, but before 1 October 2022.]
(4) Where any amount of expenditure is incurred by a taxpayer to fund expenditure of another person carrying on research and development on behalf of that taxpayer, the taxpayer may deduct an amount contemplated in subsection (2)—
[Words preceding para. (a) substituted by s. 29 (1) (c) of Act 31 of 2013 – date of commencement: 1 January 2014; the substituted subsection applies in respect of expenditure incurred in respect of research and development on or after that date, but before 1 October 2022.]
(a) if that research and development is approved by the Minister of Science and Technology in terms of subsection (9);
(b) if that expenditure is incurred in respect of research and development carried on by that taxpayer;
(c) to the extent that the other person carrying on the research and development is—
(i) (aa) an institution, board or body that is exempt from normal tax under section 10 (1) (cA); or
(bb)the Council for Scienti c and Industrial Research; or
(ii) a company forming part of the same group of companies, as de ned in section 41, if the company that carries on the research and development does not claim a deduction under subsection (2); and
[Sub-para. (ii) substituted by s. 29 (1) (d) of Act 31 of 2013 – date of commencement: 1 January 2014; the substituted subparagraph applies in respect of expenditure incurred in respect of research and development on or after that date, but before 1 October 2022.]
(d) if that expenditure is incurred on or after the date of receipt of the application by the Department of Science and Technology for approval of that research and development in terms of subsection (9).
[Sub-s. (4) substituted by s. 16 of Act 17 of 2009 and by s. 32 (1) of Act 24 of 2011 – commencement date: 1 October 2012. See also footnote at sub-s. (10).]
(5) Where a company funds expenditure incurred by another company as contemplated in subsection (4) (c) (ii), any deduction under that subsection by the company that funds the expenditure must be limited to an amount of 150 per cent of the actual expenditure incurred directly and solely in respect of that research and development carried on by the other company that is being funded.
[Sub-s. (5) amended by s. 13 (1) (c) of Act 8 of 2007 and substituted by s. 32 (1) of Act 24 of 2011 (date of commencement: 1 October 2012 – see also footnote at sub-s. (10)) and by s. 18 (1) (f) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2014; the substitution applies iro expenditure incurred iro research and development on or after that date, but before 1 October 2022.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1