Press releases

Support Programme for Industrial Innovation 

Moving technological development forward

The Minister of Trade and Industry announced on 29 August 2015 that the Support Programme for Industrial Innovation (SPII) will re-open and be administered by the Department of Trade and Industry (the dti). Previously the SPII was administered by the Industrial Development Corporation.

Support Programme for Industrial Innovation

The Minister of Trade and Industry announced on 29 August 2015 that the Support Programme for Industrial Innovation (SPII) will re-open and be administered by the Department of Trade and Industry (the dti).  Previously the SPII was administered by the Industrial Development Corporation.  

The SPII was a very successful programme and many applicants were assisted resulting in budgetary constraints that would ultimately lead to the suspension of the programme. The transfer of the programme to the dti has led to some increased benefits for Black Economic Empowerment ownership and ownership by women and people with disabilities.  

The SPII is made up of three different schemes:

• The first being the Product Process Development scheme, which provide financial assistance to small, very small and micro enterprises and allows for a maximum grant of R2 million for cost incurred in precompetitive development activities.  

• The second scheme and probably the most accessed scheme of the three is the Matching Scheme. The maximum grant is R5 million and is based on a percentage of development cost incurred.  Depending on BEE ownership the grant starts at 50% of qualifying development cost incurred and increases to 75% if BEE ownership is more than 50%.  The grant from the Matching Scheme is not repayable.  

• The last scheme is the Partnership Scheme which has a R10 million limit.  However, the grant in this scheme is repayable over a fixed period based on a percentage of the project.  The repayment period will be agreed up front.  The percentage contribution is 50% of qualifying development cost incurred.  

For some time now there has been a gap in developmental funding. The only alternative was a special tax deduction in terms of section 11D of the Income Tax which allow a 150% income tax deduction on qualifying research and development activities. The deduction is only available to companies.  Individual taxpayers do not qualify for the deduction. SPII caters for both companies and individuals.  

To qualify for SPII, the development must represent a significant advancement in technology.  Section 11D of the Income Tax Act has a very specific definition of research and development which does not cater so much for developmental work.  The benefits under SPII is much larger than what is being offered by section 11D for small to medium sized projects. For example a R10 million project under the Matching Scheme will be eligible for a R5 million grant.  The grant is exempt from tax. To receive a R5 million after tax benefit from section 11D, a company will need to spend at least R35.7 million on qualifying research and development cost.  Any research and development activities carried out by companies in excess of R35.7 million would be better off being claimed in terms of section 11D.  

The reintroduction of SPII is very positive for South Africa and is necessary to speed up technological development in South Africa.  

 

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