Explain briefly the taxation rules governing research and development expenses. (4 marks)
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Research and development expenses meeting the requirements of wholly, exclusively and necessarily incurred during the year by the person and in the production of income from the business or investment may be deducted irrespective of whether they are of a capital nature.
Research and development expenses means expenses incurred by the person in the process of developing the person’s business and improving business products or process. Research and development expenses excludes expenses incurred that are otherwise included in the cost of an asset used in the process of the research and development.