Income Tax Act · 2024 Revised Edition · Part · Ascertainment of Income
11C. Expenditure on research and development
Official textFrom Attorney General's Chambers, unchanged
For the purpose of ascertaining the income of any person carrying on a manufacturing trade or business, or trade or business for the provision of specified services, the following expenditure incurred on or after the respective dates referred to in subsection (2) (other than any amount which is allowable as a deduction under section 11) by that person shall be allowed as a deduction —
expenditure incurred on research and development undertaken directly by him and related to that trade or business
(except to the extent that it is capital expenditure on plant, machinery, land or buildings, or on alterations, additions or extensions to buildings, or in the acquisition of rights in or arising out of research and development); and
payments made by that person to an approved research and development company for undertaking on his behalf research and development related to that trade or business.
For the purposes of subsection (1) —
any person carrying on a manufacturing trade or business shall only be allowed as deduction, expenditure incurred on or after 1st January 2001; and
any person carrying on a trade or business for the provision of specified services shall only be allowed as deduction, expenditure incurred on or after 1st January 2001.
In this section —
“approved” means approved by the Minister charged with the responsibility for industrial development;
“specified services” means —
services and activities which relate to the development of computer programs;
Income Tax
services and activities which relate to the technology involved in acquiring, storing, processing or distributing information by the use of computers or computer programs;
services and activities which relate to technology applied to agriculture, horticulture or the farming of livestock, fish or other forms of aquatic life;
laboratory and testing services;
services and activities which relate to medical research; and
any other services or activities as may be prescribed by the Minister.
For the purposes of this section, any expenditure incurred by a person prior to the commencement of his trade or business is deemed to have been incurred by that person on the first day on which he carries on that trade or business.
Terms defined in s 2
research and development
Defined · s 2“research and development” means any systematic or intensive study carried out in the field of science or technology with the object of using the results of the study for the production or improvement of materials, devices, products, produce, or processes, but does not include — (a) quality control or routine testing of materials, devices or products; (b) research in the social sciences or the humanities; (c) routine data collection; (d) efficiency surveys or management studies; or (e) market research or sales promotions;
research and development company
Defined · s 2“research and development company” means a company which provides research and development services for any trade or business;
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