R&D Tax Allowance (RDTA)

New allowance is deductible from Chargeable Income effective YA2009 – YA2013.

It is capped at 50% of the first $300,000 of Chargeable Income.

RDTA Computation

Chageable income
Less – RDTA set off
—————————-
X
Less – Partial Exemption
—————————-
Net Chargeable Income (A)
====================

RDTA = 50% of A
Max – $150,000

Basic guidelines of how RDTA works
1. Compute RDTA for Year 1
2. Year 1 RDTA is available for setoff against net Chargeable Income for Year 2, 3 and 4
3. Any unutilised RDTA would be “lost” after 3 years
4. The setoff amount is the lower of RDTA OR incremental R&D expenditure by company for the year.

What is “incremental” R&D expenditure?

Example
R&D expenditure for YA2009
Less – R&D expenditure for YA2008
————————————–
Incremental R&D expenditure
==========================

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