DEPRECIATION ALLOWANCES FOR EQUIPMENT USED FOR RESEARCH, DEVELOPMENT AND QUALITY CONTROL

Mr J. F. Conceicao asked the Minister for Finance to what extent advantage has been taken of provisions whereby accelerated depreciation can be allowed for approved equipment used for research develpment and quality control.

Mr Hon Sui Sen: No separate figures are kept for allowances granted in respect of equipment for research, development and quality control.

Special allowances for plant and machinery of industrial enterprises (which would therefore include equipment for research, development and quiality control) have been provided since 1965 under the Income Tax Act at thirty-three and one-third per cent, as against normal depreciation allowances of twenty per cent for other businesses. Special allowances increased from $16,000 for two companies in 1966 to $17,574,600 for the year of assessment 1969. Latest figures(for 1970 and 1971) are not yet available.

The Ministry of Science and Technology has suggested that further encouragement should be given to quality control and research and development activiites. The Treasury considers the provisions under the Income Tax Act already adequate as they allow for expenditure on such activities to be fully deductible from income, while the special allowances for capital equipment are generous. The Treasury will, however, be sympathetic to any further proposals which may be made.