Section 11D of the Income Tax Act
Section 11D(1) of the ITA sets out a definition for “research and development” that determines eligibility for the R&D tax incentive. Currently, the wording “scientific or technological” is only found in the title of the section and in one of the paragraphs of the definition, even though the intention has always been that the incentive should only apply to activities with an aim of solving a scientific or technological uncertainty.
The proposed changes include:
- New definition of “scientific or technological research and development”.
- Activities that are specifically excluded from the definition of R&D
- Additional administrative issues such as a six-month grace period for receipt of pre-approval applications, disclosure of information to SARS and sanctions for breach of secrecy.
You can access the proposed changes to section 11D here.
You can access the draft explanatory memorandum here.