Feedback on the Department of Science and Technology R&D Tax Incentive Breakfast

The Department of Science and Technology hosted a breakfast on Friday the 2nd of March 2018 at the Innovation Hub. The purpose of the breakfast was to provide the private sector with feedback on the Section 11D Research and Development Tax Incentive especially the work of the task team that was set up in November 2015. It was also an opportunity to hear from the new minister Mmamoloko Kubayi-Ngubane as well companies in the private sector who shared their experiences with the incentive.

The key take-aways from the breakfast were as follows:

* The DST has worked through the back-log of pre-approval applications and is closer to their goal of a 90- day turnaround. Currently companies can expect a 4 month wait from submission to adjudication.
* 15 of the 17 recommendations of the Task Team were implemented (6 with modifications). The 2 recommendations that will not be implemented relate to increasing the deduction from 150% and converting the incentive into a tax credit.
* National Treasury has heeded calls to consider changes to the legislation relating to the internal business process exclusion which affects software development projects as well as the innovative requirement, a word whose definition has brought about uncertainty.
* The department has done a lot of work in order to simplify the application process and to make the incentive more accessible for companies to use. This has included releasing new guidelines, introducing an online application system and allowing companies to make an additional submission if the panel intends to reject an application.