Thesis (MAcc)--Stellenbosch University, 2011. / ENGLISH ABSTRACT: In February 2007 section 11D was inserted into the Income Tax Act 58 of 1962 as
amended. The aim of the section was to encourage private-sector investment in
scientific or technological research and development (R&D). This was an indirect
approach by National Treasury to increase national scientific and technological R&D
expenditure in order to complement government expenditure on the subject matter.
Although section 11D provides generous income tax incentives, the interpretation
thereof was found to be a hindrance in attaining the goal sought by National
Treasury. This is due to the fact that this section demands a firm grasp of intellectual
property (IP) law, principles of tax, and technology in general. This is clearly shown
by the lapse in time (i.e. three years) between the passing of section 11D into law
and the release of the South African Revenue Services’ (SARS) final interpretation of
section 11D, i.e. Interpretation Note 50.
The release of Interpretation Note 50 in August 2009 sparked wide-spread
controversy among many a patent attorneys and tax consultants. The interpretation
of the section by SARS was found by many to be so draconian that it destroyed the
incentive entirely.
The objective of this study is to provide greater clarity on the areas of section 11D
which have been found to be onerous to taxpayers. Hence the meaning of “new”
and “non-obvious” in the context of a discovery of information as eligible R&D
activity1 was examined. Hereafter the ambit of the exclusion of expenditure on
“management or internal business process”2 from eligibility for the incentive in the
context of computer program development was examined.
It was established that the meaning of “novel” and “non-obvious” as construed by IP
jurisprudence could mutatis mutandis be adopted for purposes of interpreting section
11D(1) of the Income Tax Act. Therefore, information would be regarded as “new” if
it did not form part of the state of the art immediately prior to the date of its discovery. The state of the art was found to comprise all matter which had been made available
to the public (both in the Republic and elsewhere) by written or oral description, by
use or in any other way. Information would also be regarded as non-obvious if an
ordinary person, skilled in the art, faced with the same problem, would not have
easily solved the problem presented to him by having sole reliance on his
intelligence and what was regarded as common knowledge in the art at the time of
the discovery.
It was submitted that in construing the meaning of the “management or internal
business process” exclusion, the intention of the lawgiver should be sought and
given effect to. The Explanatory Memorandum issued on the introduction of section
11D states that the lawgiver’s intention with the section was to ensure that South
Africa is not at a global disadvantage concerning R&D. The R&D tax legislation of
Australia, the United Kingdom and Canada was therefore examined to establish the
international bar set in this regard.
SARS is of the view that the “management or internal business process” exclusion
applies to the development of any computer program (with the said application)
irrespective of whether the program is developed for the purpose of in-house use,
sale or licensing. However, it was found that such a restrictive interpretation would
place homebound computer development at a severe disadvantage when compared
with the legislation of the above mentioned countries. In order to give effect to the
intention of legislature, it was submitted that the exclusion provision should be
construed to only include the development of computer programs for in-house
management or internal business process use. Computer programs developed for
the said application, but for the purpose of being sold or licensed to an unrelated
third party, should still be eligible for the R&D tax incentive. / AFRIKAANSE OPSOMMING: Artikel 11D is gevoeg tot die Inkomstebelastingwet 58 van 1962 gedurende
Februarie 2007. Die wetgewing het ten doel om privaatsektor investering in
tegniese en wetenskaplike navorsing en ontwikkeling (N&O) aan te moedig.
Nasionale Tesourie dra dus op ‘n indirekte wyse by tot die hulpbronne wat die
regering op nasionale vlak aan tegniese en wetenskaplike N&O bestee in ‘n
gesamentlike poging om N&O in Suid-Afrika te stimuleer.
Artikel 11D hou op die oog af baie gunstige inkomstebelasting aansporings in. Dit
wil egter voorkom asof die interpretasie daarvan as ernstige struikelblok dien in die
bereiking van die doel wat Nasionale Tesourie voor oë gehad het. Dit kan
toegeskryf word aan die feit dat die artikel ‘n wesenlike begrip van intellektuele
eiendom (IE) wetgewing, belasting beginsels en tegnologie in die algemeen vereis.
Die feit dat dit die Suid-Afrikaanse Inkomstebelastingdiens (SAID) ongeveer drie jaar
geneem het om hul interpretasie (i.e. Interpretasienota 50) van die artikel te
finaliseer dien as bewys hiervan.
Die SAID het gedurende Augustus 2009, Interpretasienota 50 vrygestel. Die nota
het wye kritiek ontlok by menigte IE prokureurs en belastingkonsultante. Daar is
algemene konsensus dat die SAID se interpretasie so drakonies van aard is, dat dit
enige aansporing wat die artikel bied, geheel en al uitwis.
Die doel van hierdie studie is om die problematiese bepalings van die
aansporingsartikel te verlig en groter sekerheid daaroor te verskaf. Gevolglik is die
betekenis van “nuut” en “nie-ooglopend” soos van toepassing op ‘n ontdekking van
inligting as kwalifiserende N&O aktiwiteit, bestudeer. Verder is die omvang van die
bepaling wat besteding op “bestuur of interne besigheidsprosesse” uitsluit van
kwalifikasie vir die aansporingsinsentief, bestudeer in die konteks van rekenaar
programmatuur ontwikkeling. By nadere ondersoek is daar bevind dat die betekenis van “nuut” en “nie-ooglopend”
soos uitgelê vir doeleindes van IE wetgewing mutatis mutandis aangeneem kan
word vir die uitleg van artikel 11D(1)(a) van die Inkomstebelastingwet. Vervolgens
word inligting as “nuut” beskou indien dit nie deel uitmaak van die stand van die
tegniek onmiddellik voor die datum waarop dit ontdek is nie. Die stand van die
tegniek vir die bepaling van nuutheid behels alle stof wat reeds aan die publiek
beskikbaar gestel is (hetsy binne die Republiek of elders) by wyse van skriftelike of
mondelinge beskrywing, deur gebruik of op enige ander wyse. Inligting word as nie-ooglopend
beskou indien ‘n gewone werker wat bedrewe is in die tegniek en
gekonfronteer is met dieselfde probleem, nie geredelik die antwoord tot die probleem
sou vind deur bloot staat te maak op sy intelligensie en die algemene kennis in die
bedryf op die tydstip van die ontdekking nie.
Daar is aan die hand gedoen dat die doel van die wetgewer nagestreef moet word
met die uitleg van die “bestuur of interne besigheidsprosesse” uitsluiting. Die
Verklarende Memorandum wat uitgereik is met die bekendstelling van artikel 11D het
gemeld dat die wetgewer ten doel gehad het om Suid Afrika op ‘n gelyke speelveld
met die res van die wêreld te plaas wat betref N&O. Die N&O belastingbepalings
van Australië, die Verenigde Koninkryk (VK) en Kanada is dus bestudeer om die
internasionale standaard in die opsig vas te stel.
Die SAID is van mening dat die strekwydte van die uitsluiting so omvangryk is dat dit
alle rekenaar programmatuur wat ontwikkel is vir ‘n bestuur- of interne
besigheidsproses toepassing tref, ten spyte daarvan dat die bedoeling van die
belastingpligtige was om die programmatuur te verkoop of te lisensieër aan ‘n
onverbonde derde party. Dit was egter bevind dat so ‘n beperkende uitleg die
aansporing van rekenaar programmatuur ontwikkeling in Suid Afrika geweldig
benadeel in vergelyking met die regime wat geld in lande soos Australië, die VK en
Kanada. Ten einde gevolg te gee aan die bedoeling van die wetgewer, is daar aan
die hand gedoen dat die uitsluiting slegs so ver moet strek as om rekenaar
programme vir eie gebruik te diskwalifiseer. Rekenaar programme wat dus
ontwikkel word met die doel om dit te verkoop of te lisensieër aan onverbonde derde
partye moet steeds vir die aansporingsinsentief kwalifiseer.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/17808 |
| Date | 12 1900 |
| Creators | Strauss, Carien |
| Contributors | Van Schalkwyk, C. J., Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Accountancy. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | Unknown |
| Type | Thesis |
| Format | 80 p. |
| Rights | Stellenbosch University |
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