Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 355.440

  (1)   The * R&D entity has an amount under this section if:

  (a)   the entity, or another entity mentioned in subsection   (5), receives or becomes entitled to receive a * recoupment from either of the following (otherwise than under the * CRC program):

  (i)   an * Australian government agency;

  (ii)   an STB (within the meaning of Division   1AB of Part   III of the Income Tax Assessment Act 1936 ); and

  (b)   the recoupment is received, or the entitlement to receive the recoupment arises, during the present year; and

  (c)   either:

  (i)   the recoupment is of expenditure incurred on or in relation to certain activities; or

  (ii)   the recoupment requires expenditure (the project expenditure ) to have been incurred, or to be incurred, on certain activities.

Note:   Paragraph   (c) includes expenditure incurred in purchasing a tangible depreciating asset to be used when conducting R&D activities.

  (2)   The amount is equal to the sum of:

  (a)   so much of the expenditure referred to in subsection   (1) that is deducted under this Division; and

  (b)   for each asset (if any) for which expenditure referred to in subsection   (1) is included in the asset's * cost--each amount (if any) equal to the asset's decline in value that is deducted under this Division;

that is taken into account in working out * tax offsets under section   355 - 100 obtained by the * R&D entity for one or more income years.

Note:   Paragraphs   (a) and (b) of this subsection refer to amounts notionally deducted under this Division (see section   355 - 105).

Amount is reduced by any repayments of the recoupment

  (3)   For the purposes of subsection   (2), reduce the expenditure referred to in subparagraph   (1)(c)(i) by any repayments of the * recoupment during an income year.

Cap on extra income tax if recoupment relates to a project

  (4)   Despite subsection   (2), if the * recoupment is covered by subparagraph   (1)(c)(ii), the amount mentioned in subsection   (2) for the present year cannot exceed the amount worked out using the following formula:

where:

"net amount of the recoupment" means the total amount of the * recoupment, less any repayments of the recoupment during an income year.

"R&D expenditure" means the amount mentioned in subsection   (2), disregarding subsection   (3).

Related entities

  (5)   The other entities for the purposes of paragraph   (1)(a) are as follows:

  (a)   an entity * connected with the * R&D entity;

  (b)   an * affiliate of the R&D entity or an entity of which the R&D entity is an affiliate.