The Architecture industry employs architects, engineers, architectural drafters and interior architects and more who often spend a significant portion of their time developing new designs, improving existing designs and manufacturing techniques. If you are in the architecture industry, you might saying but “research and development” [R&D] means scientists in white lab coats working in a laboratory. Well, that’s
Architects have always seen change as an opportunity. This can be seen in the evolution of the role and its migration to the T-shaped professional model, where the architect is no longer solely a master of their own profession, but knowledgeable about other construction design professions, document control procedures, CAD management, the build and installation process, and more recently data analysis and software application development.
Now with the introduction of efficiency gains and automation brought about through the application of the Building Information Modelling (BIM) process, architecture has more opportunities to innovate through R&D.
These companies need to keep up with the latest trends, and also to ensure that solutions they propose are compliant to latest regulations and environmental challenges. In responding to the unique requirements of their clients, the Architecture industry is engaging in some form of R&D to find new and improved solutions to meet the needs of their clients.
“It’s income tax time again, Americans: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta.”
Dave Barry
Furthermore, the ongoing improvement and availability of new materials, design techniques, products and technologies, companies must constantly learn and innovate to stay up to date – and this is basis of why they R&D is important. R&D means finding unique and different ways to solve challenges in design and client requirements. Therefore, the Architecture industry is involved in R&D every day, and it is important to not only recognise this, but to take advantage of the SA R&D Tax Allowance.
What is the R&D tax incentive?
This incentive is part of a package of measures that the government of South Africa has introduced to support innovation, industrial development and competitiveness.
The objective is to help companies build capabilities to create new products, processes, devices and techniques, or significantly improve existing ones. Ultimately, the R&D Tax Incentive hopes to encourage businesses to undertake and invest in R&D in South Africa.
Benefits of the R&D Tax Incentive:
- a 150 % Super Tax Deduction on research and development operational expenses
- Accelerated Depreciation at 50/30/20 percent over 3 years for R&D plant and machinery
- Immediate write-off on pilot plant or pilot mould in the year of implementation
As an example, if a business spends R10m on R&D, it can save R1.4m in taxes. This saving is only applies to the 50% uplift or the ‘Super’ Deduction. This saving on income tax can be used to invest in new equipment, in other areas of the business, or quite simply generate more profit. This is a generous benefit that can be used to grow your business.
“The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether to avoid them, by means which the law permits, cannot be doubted.”
George Sutherland
Which activities can qualify for the tax allowance?
Examples of Architectural activities eligible for R&D tax allowance include the following:
- Developing designs, processes or systems to make them more resource efficient (such as in terms of time, cost, labour or material)
- Collaborating with engineers, contractors or external specialists to develop designs?
- Using existing materials, design processes or manufacturing techniques on your projects, but in a new and novel way
- Working on projects involving Business Information Modelling (BIM) or software testing (such as structural, thermal or wind software modelling)
- Having to meet demanding acoustic, natural light or thermal requirements that affect the building fabric
- Working on projects involve integrated building plant and technology, such as M&E plant or computer
These are just a few examples of research and development activities in the Architectural industry.
The R&D Tax Incentive means paying less corporate tax to SARS.
If your company operates in the Architecture industry, there is good reason for you to find out whether your projects and activities qualify for the R&D Tax Allowance. For a free assessment, speak with Vantage Advisors to help you understand whether you can qualify for the tax deductions.
email: vantage@taxincentive.co.za