Many South African technology entrepreneurs are unaware of the various incentives available to them to undertake Research & Development (R&D) of new innovative technologies. One such incentive is the Section 11D incentive from SARS.
Section 11D allows:
- A deduction equal to 150% of expenditure incurred directly for Research & Development and
- An accelerated depreciation deduction (that is, 50:30:20) for capital expenditure incurred on machinery or plant used for R&D.
Importantly, if you are considering applying for the Section 11D incentive, you will need to apply in advance and it often requires specialist skills for submitting an application.
This includes a submission to an R&D Adjudication Committee who will review the application.
The R&D adjudication committee is made up of–
- Three people employed by the Department of Science and Technology, and appointed by the Minister of Science and Technology
- One person employed by National Treasury, who is appointed by the Minister of Finance
- Three people employed by SARS, who are appointed by the Minister of Finance.
SARS will allow a deduction when:
- The R&D was pre-approved by the R&D Adjudication Committee
- The taxpayer has an approval letter issued by the Department of Science and Technology
- The expenditure has incurred:
- Directly for research and development
- In the production of income and
- In the carrying on of trade.
If you are a technology entrepreneur and would like assistance in applying for the Section 11D incentive or similar technology incentives / grants, please complete the form below and one of our Problem-Solvers will be in contact to assist you: