Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 355.480

Notional deductions for earlier year associate expenditure

  (1)   An * R&D entity can deduct for an income year (the present year ) expenditure it incurred to its * associate during an earlier income year to the extent that:

  (a)   the expenditure was incurred on one or more * R&D activities:

  (i)   for which the R&D entity is registered under section   27A of the Industry Research and Development Act 1986 for an income year; and

  (ii)   that are activities to which section   355 - 210 (conditions for R&D activities) applies; and

  (b)   the expenditure is paid to that associate during the present year; and

  (c)   subsection   (2) applies to the expenditure.

Note 1:   This section applies in a modified way to R&D partnership expenditure (see sections   355 - 510 and 355 - 515).

Note 2:   Expenditure paid in income years starting on or after 1   July 2011 may be deductible for activities registered for income years starting before 1   July 2011 (see section   355 - 200 of the Income Tax (Transitional Provisions) Act 1997 ).

Expenditure cannot have been otherwise deducted etc.

  (2)   This subsection applies to the expenditure if:

  (a)   the * R&D entity can deduct the expenditure, or is entitled to a * tax offset for the expenditure, under any other Division of this Act for an earlier income year; and

  (b)   by the time of lodging its * income tax return for the most recent income year before the present year, the R&D entity had neither:

  (i)   deducted the expenditure; nor

  (ii)   obtained a tax offset for the expenditure;

    as described in paragraph   (a).

  (3)   The entitlement to the deduction, or * tax offset, described in paragraph   (2)(a) ceases to the extent that subsection   (2) applies to the expenditure.

Example:   If, by the time mentioned in paragraph   (2)(b), an R&D entity chose to deduct only a third of the expenditure it could have deducted under another Division, then the remaining 2 thirds of that expenditure:

(a)   can be deducted under this section; but

(b)   can no longer be deducted under the other Division.

Notional deduction is subject to integrity rules etc.

  (4)   This section has effect subject to section   355 - 225 (excluded expenditure), Subdivision   355 - F (integrity rules) and subsection   355 - 580(3) (CRC contributions).

Table of sections

355 - 500   What this Subdivision is about

355 - 505   Meaning of R&D partnership and partner's proportion

355 - 510   R&D partnership expenditure on R&D activities

355 - 515   R&D activities conducted by or for an R&D partnership

355 - 520   When notional deductions arise for decline in value of depreciating assets of R&D partnerships

355 - 525   Balancing adjustments for R&D partnership assets only used for R&D activities

355 - 530   Implications for partner's aggregated turnover

355 - 535   Disposal of R&D results--assets of R&D partnerships

355 - 540   Application of recoupment rules

355 - 545   Relevance for net income, and losses, of the R&D partnership