Mood swingers

Here are five pieces of important subsidy news. Depending on your frame of mind, it might just convince you to drop the idea of staying in bed until the year has passed, or to stick with it.

DTI comes to the MCEP party

The excitement about the new MCEP, launched middle of 2012, quickly waned when the adverse effect of its MVA capping formula�s became apparent. But, the DTI all along realised that there might be a problem. Finally, on 10 December 2012 they published the revised capping formula�s. Small applicants will no longer be capped at all, whilst the larger applicants have had their capping drastically improved. So, now a small applicant will indeed receive a 50% grant on its expansion and the larger guys will get their 40% or 30%, or very close to it. We expect now that the MCEP (Manufacturing Competitiveness Enhancement Program), in 99% of cases, will offer larger grants than the MIP (Manufacturing Investment Program). This positive development is in no small way, due to lobbying by the Incentive Consultants Association.

These adjustments will only apply to applications submitted on or after 10 December 2012.

Tourism will benefit no more

Late last year the DTI ceased to offer support for tourism development. The Tourism Support Program (TSP) therefore closed for business. The Tourism Department has taken over this function, but not the TSP grant program. They might announce some support measures closer to 1 April 2013.

A taxable tax-exempt grant

No really, it�s serious!

The Treasury Department has proposed a new clause to the tax act that will also tax the tax exempt grants offered by some programs. The clause requires that any grant income received in respect of an investment in assets, needs to be deducted from the purchase price of such assets, before claiming a wear and tear allowance. The amendment will most probably take effect from 1 January 2013. Treasury officials might think they made a shrewd move, but most tax payers would call it �..!

The good smell of something fishy

An incentive program for aqua culture industries, including cultivation, processing and ancillary activities, was launched late in 2012. The program, called ADEP, applies to both fresh water and marine activities. The grant is based on investment cost and varies between 20% and 45%.

�For the good of everyone�

Another new program was initiated late last year by the DTI with the aim �to develop incubators and create successful enterprises with the potential to revitalise communities and strengthen local and national economies�. This program, called Incubation Support Program (ISP) offers to support initiatives that aim to generate economic momentum within communities. The grant is 50% to 60% and goes up to R10 million per year for three years. Applications for extension will be considered.

Please contact Dectra for more information on any of these topics or on any other matter relating to Department of Trade and Industry incentives.

Theo Meintjes
Managing Director



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