S.L. 123.82 Art. 10Allowable R & D expenditure.

(1) Expenditure shall constitute allowable R&D expenditure if and to the extent that it meets all the following conditions:

(a) it is qualifying R&D expenditure actually incurred by a company and is not reimbursed to or otherwise recoverable by it;

(b) it is an item of expenditure to which the letter of approval issued under rule 8 refers and in respect of which any condition that may have been made applicable to the project in terms of rule 6(2) are satisfied;

(c) it was incurred during the project period;

(d) it is correctly, clearly and separately recorded in the records of the company and supported by documentary evidence.

(2) The investment represented by allowable R&D expenditure that falls within the descriptions of rule 5(2)(b) and (c) shall be retained within the company for at least three years after the termination of the project period or for such shorter period as the Corporation may specify in the letter of approval in terms of rule 8(1)(e), and the assets to which such expenditure refers shall be, for the said period, used solely and on a continual basis for research and development.

(3) If an investment or any part thereof represented by expenditure referred to in sub-rule (2) is not retained within the company for the period referred to in that sub-rule, or is not, during the said period, used solely and on a continual basis for research and development, the amount of expenditure corresponding to that investment or part thereof, as the case may be, that is not so retained shall, for the purpose only of determining the right to the tax credit as provided in rule 11(2), be deemed to have never constituted allowable R&D expenditure and the provisions of rule 12 shall apply.