Commonwealth Consolidated Acts Commonwealth Consolidated ActsIncome Tax Assessment Act 1997
1 Subsection 63 - 10(1) (after table item 30)
Insert:
35 | A * tax offset under Division 355 (about R&D) that is not covered by section 67 - 30 | You may carry it forward to a later income year (under Division 65) |
2 Section 67 - 23 (table item 35)
Repeal the item.
3 At the end of section 67 - 23
Add:
Note 3: For the tax offsets available under Division 355 (about R&D), see section 67 - 30.
4 At the end of Division 67
Add:
67 - 30 Refundable tax offsets--R&D
(1) A * tax offset to which an * R&D entity is entitled under section 355 - 100 (about R&D) for an income year is subject to the refundable tax offset rules if the amount of the tax offset is worked out using the percentage in item 1 of the table in subsection 355 - 100(1).
Note 1: Otherwise, the tax offset will be a non - refundable tax offset (see item 35 of the table in subsection 63 - 10(1)).
Note 2: This subsection can apply to an entitlement under subsection 355 - 100(1) or (2).
(2) Without limiting its effect apart from this subsection, subsection ( 1) also has the effect it would have if:
(a) subsection ( 3) had not been enacted; and
(b) the reference in subsection ( 1) to an * R&D entity were, by express provision, confined to an R&D entity that:
(i) is a * constitutional corporation; or
(ii) has its registered office (within the meaning of the Corporations Act 2001 ) or principal place of business (within the meaning of that Act) located in a Territory.
(3) Without limiting its effect apart from this subsection, subsection ( 1) also has the effect it would have if:
(a) subsection ( 2) had not been enacted; and
(b) this Act applied so that * tax offsets under section 355 - 100 could only be worked out in respect of * R&D activities conducted or to be conducted:
(i) solely in a Territory; or
(ii) solely outside of Australia; or
(iii) solely in a Territory and outside of Australia; or
(iv) for the dominant purpose of supporting * core R&D activities conducted, or to be conducted, solely in a Territory.
Part 2 -- Prepayments of expenditure
Income Tax Assessment Act 1936
5 Subsection 82KZL(1) ( paragraph ( d) of the definition of excluded expenditure )
Repeal the paragraph, substitute:
(d) to the extent that it is of a capital nature and cannot be deducted under:
(i) section 355 - 205 (R&D expenditure); or
(ii) section 355 - 480 (earlier year associate R&D expenditure);
of the Income Tax Assessment Act 1997 ; or
(da) to the extent that it is of a private or domestic nature; or
6 Subsection 82KZL(1)
Insert:
"R&D activities" has the same meaning as in the Income Tax Assessment Act 1997 .
7 Subsection 82KZL(1) (definition of research and development activities )
Repeal the definition.
8 Subsection 82KZL(3)
Omit "carrying on research and development activities", substitute "conducting R&D activities".
9 After section 82KZLA
Insert:
In addition to its application apart from this section, this Subdivision applies to expenditure deductible under section 355 - 480 of the Income Tax Assessment Act 1997 as if:
(a) references in this Subdivision to incurring the expenditure were references to paying the expenditure; and
(b) references in this Subdivision to the expenditure year were references to the payment year.
10 Paragraph 82KZM(1)(c)
Repeal the paragraph, substitute:
(c) apart from this section, a deduction under:
(i) section 8 - 1; or
(ii) section 355 - 205 (R&D expenditure) or 355 - 480 (earlier year associate R&D expenditure);
of the Income Tax Assessment Act 1997 , in respect of the expenditure, would be allowable from the taxpayer's assessable income for the year of income in which the expenditure is incurred;
11 Paragraph 82KZMA(1)(a)
Repeal the paragraph, substitute:
(a) apart from that section, the taxpayer could deduct the expenditure for the expenditure year under:
(i) section 8 - 1; or
(ii) section 355 - 205 (R&D expenditure) or 355 - 480 (earlier year associate R&D expenditure);
of the Income Tax Assessment Act 1997 ; and
12 Paragraph 82KZME(1)(a)
Repeal the paragraph, substitute:
(a) apart from that section, the taxpayer could deduct the expenditure for the expenditure year under:
(i) section 8 - 1; or
(ii) section 355 - 205 (R&D expenditure) or 355 - 480 (earlier year associate R&D expenditure);
of the Income Tax Assessment Act 1997 ; and
13 Paragraph 82KZMF(2)(a)
Omit "section 73B, 73BA, 73BH, 73QA, 73QB or former section 73Y of this Act or".
14 At the end of subsection 82KZMF(2)
Add:
Note: Deductions under section 355 - 205 or 355 - 480 of the Income Tax Assessment Act 1997 for R&D expenditure are subject to this section (see subsection 8 - 5(2) and section 355 - 105 of that Act).
Income Tax Assessment Act 1997
15 Subsection 40 - 25(7) (note)
Omit "Note", substitute "Note 1".
16 At the end of subsection 40 - 25(7)
Add:
Note 2: When this Division notionally applies under section 355 - 310 (about depreciating assets used for R&D activities), the taxable purpose is sometimes only the purpose of conducting R&D activities.
17 Subsection 40 - 65(6)
Repeal the subsection, substitute:
Exception: also notionally deductible under R&D provisions
(6) If:
(a) only one of the following events has happened:
(i) you have deducted one or more amounts under this Division for an asset;
(ii) you have been entitled under section 355 - 100 (about R&D) to one or more * tax offsets because you can deduct one or more amounts under section 355 - 305 for an asset; but
(b) later, the other event happens for the asset;
then, for the purposes of working out the deduction for the later event, you must choose the same method that you chose for the first event.
Note 1: Deductions under section 355 - 305 (about decline in value of tangible depreciating assets used for R&D activities) are worked out using a notional application of this Division.
Note 2: This subsection applies with changes if you have or could have deducted an amount under former section 73BA of the Income Tax Assessment Act 1936 for the asset (see section 40 - 67 of the Income Tax (Transitional Provisions) Act 1997 ).
(7) If:
(a) the events in paragraph ( 6)(a) could both arise for the same period for an asset; and
(b) neither event has already arisen for the asset;
then you must choose the same method for the purposes of working out the deduction for each event.
18 Subsection 40 - 95(9) (note)
Repeal the note.
19 Subsection 40 - 100(4)
Repeal the subsection, substitute:
Criteria for making a determination
(4) The Commissioner is to make a determination of the effective life of a * depreciating asset in accordance with subsections ( 5) and (6).
(5) Firstly, estimate the period (in years, including fractions of years) the asset can be used by any entity for one or more of the following purposes:
(a) a * taxable purpose;
(b) the purpose of producing * exempt income or * non - assessable non - exempt income;
(c) the purpose of conducting * R&D activities, assuming that this is reasonably likely.
(6) Secondly, if relevant for the asset:
(a) assume the asset will be subject to wear and tear at a rate that is reasonable for the Commissioner to assume; and
(b) assume the asset will be maintained in reasonably good order and condition; and
(c) have regard to the period within which the asset is likely to be scrapped, sold for no more than scrap value or abandoned.
However, for paragraph ( c), disregard reasons attributable to the technical risk in conducting * R&D activities if it is reasonably likely that the asset will be used for such activities.
20 Subsections 40 - 105(1), (2) and (3)
Repeal the subsections, substitute:
(1) You work out the effective life of a * depreciating asset yourself in accordance with this section.
(1A) Firstly, estimate the period (in years, including fractions of years) the asset can be used by any entity for one or more of the following purposes:
(a) a * taxable purpose;
(b) the purpose of producing * exempt income or * non - assessable non - exempt income;
(c) the purpose of conducting * R&D activities, assuming that this is reasonably likely.
(1B) Secondly, if relevant for the asset:
(a) have regard to the wear and tear you reasonably expect from your expected circumstances of use; and
(b) assume that the asset will be maintained in reasonably good order and condition.
(2) If, in working out that period, you decide that the asset would be likely to be:
(a) scrapped; or
(b) sold for no more than scrap value or abandoned;
before the end of that period, its effective life ends at the earlier time. However, when making your decision, disregard reasons attributable to the technical risk in conducting * R&D activities if it is reasonably likely that the asset will be used for such activities.
(3) You work out the period mentioned in subsection ( 1A) or (2) beginning at the * start time of the * depreciating asset.
21 Subsection 40 - 215(1)
Omit "(1)".
22 At the end of subsection 40 - 215(1)
Add:
Note: This section does not apply to notional deductions under section 355 - 305 or 355 - 520 (about R&D) because those provisions are about deducting the asset's decline in value, not its cost.
23 Subsection 40 - 215(2)
Repeal the subsection.
24 Section 40 - 292
Repeal the section, substitute:
40 - 292 Adjustments--assets used for both general tax purposes and R&D activities
(1) This section applies if:
(a) a * balancing adjustment event happens in an income year (the event year ) for an asset you * held and for which:
(i) you can deduct, for an income year, an amount under section 40 - 25, as that section applies apart from Division 355 and former section 73BC of the Income Tax Assessment Act 1936 ; or
(ii) you could have deducted, for an income year, an amount as described in subparagraph ( i) if you had used the asset; and
(b) you are entitled under section 355 - 100 to * tax offsets for one or more income years for deductions (the R&D deductions ) under section 355 - 305 for the asset.
Note: This section applies in a modified way if you have deductions for the asset under former section 73BA or 73BH of the Income Tax Assessment Act 1936 (see section 40 - 292 of the Income Tax (Transitional Provisions) Act 1997 ).
Section 40 - 290 to be applied as if use for conducting R&D activities were use for a taxable purpose
(2) In applying section 40 - 290 (including references in that section to the reduction of deductions under section 40 - 25) in relation to the asset, assume that using the asset for a * taxable purpose includes using it for the purpose of conducting the * R&D activities to which the R&D deductions relate.
Increase in amounts deductible under section 40 - 285
(3) If you are entitled under section 355 - 100 to a * tax offset for the event year in respect of deductions under Division 355 totalling at least $20,000, any amount (the section 40 - 285 amount ) you can deduct for the asset under section 40 - 285 (after applying subsection ( 2) of this section) for the event year is increased by:
(a) if your * aggregated turnover for the event year is less than $20 million-- 1 / 2 of the amount worked out under subsection ( 5) of this section; and
(b) otherwise-- 1 / 3 of the amount worked out under subsection ( 5) of this section.
Increase in amounts assessable under section 40 - 285
(4) Any amount (the section 40 - 285 amount ) that is included in your assessable income for the asset under section 40 - 285 (after applying subsection ( 2) of this section) for the event year is increased by 1 / 3 of the amount worked out under subsection ( 5) of this section.
Component of any increase in amounts deductible or assessable
(5) The amount is worked out as follows:
where:
"adjusted section 40-285 amount" means:
(a) if the section 40 - 285 amount is a deduction--the amount of the deduction; or
(b) if the section 40 - 285 amount is an amount included in your assessable income--so much of the section 40 - 285 amount as does not exceed the total decline in value.
"total decline in value" means the * cost of the asset less its * adjustable value.
40 - 293 Adjustments--partnership assets used for both general tax purposes and R&D activities
(1) This section applies to an * R&D partnership if:
(a) a * balancing adjustment event happens in an income year (the event year ) for a * depreciating asset * held by the R&D partnership and for which:
(i) the R&D partnership can deduct, for an income year, an amount under section 40 - 25, as that section applies apart from Division 355 and former section 73BC of the Income Tax Assessment Act 1936 ; or
(ii) the R&D partnership could have deducted, for an income year, an amount as described in subparagraph ( i) if it had used the asset; and
(b) one or more partners of the R&D partnership are entitled under section 355 - 100 to * tax offsets for one or more income years for deductions (the R&D deductions ) under section 355 - 520 for the asset.
Note: This section applies in a modified way if the partners have deductions for the asset under former section 73BA or 73BH of the Income Tax Assessment Act 1936 (see section 40 - 293 of the Income Tax (Transitional Provisions) Act 1997 ).
Section 40 - 290 to be applied as if use for conducting R&D activities were use for a taxable purpose
(2) In applying section 40 - 290 (including references in that section to the reduction of deductions under section 40 - 25) in relation to the asset, assume that using the asset for a * taxable purpose includes using it for the purpose of conducting the * R&D activities to which the R&D deductions relate.
Increase in amounts deductible or assessable under section 40 - 285
(3) Any amount (the section 40 - 285 amount ):
(a) that the * R&D partnership can deduct for the asset under section 40 - 285 (after applying subsection ( 2) of this section) for the event year; or
(b) that is included in the R&D partnership's assessable income for the asset under section 40 - 285 (after applying subsection ( 2) of this section) for the event year;
is increased by 1 / 3 of the following amount:
where:
"adjusted section 40-285 amount" means:
(a) if the section 40 - 285 amount is a deduction--the amount of the deduction; or
(b) if the section 40 - 285 amount is an amount included in the * R&D partnership's assessable income--so much of the section 40 - 285 amount as does not exceed the total decline in value.
"total decline in value" means the * cost of the asset less its * adjustable value.
25 Subsection 40 - 425(8)
Repeal the subsection, substitute:
Exception: R&D
(8) You cannot allocate a * depreciating asset to a low - value pool if you are entitled under section 355 - 100 to a * tax offset for a deduction under section 355 - 305 for the asset for an income year starting before, or at the same time as, the allocation has effect.
Note: A similar rule applies if you deducted or could have deducted amounts under former 73BA of the Income Tax Assessment Act 1936 (see section 40 - 430 of the Income Tax (Transitional Provisions) Act 1997 ).
Income Tax Assessment Act 1997
26 Section 43 - 35
Repeal the section, substitute:
43 - 35 Requirement for registration under the Industry Research and Development Act
You may deduct an amount under this Division on the basis of using capital works for the purpose of conducting * R&D activities only if:
(a) you are registered under section 27A (registering R&D activities) of the Industry Research and Development Act 1986 for the R&D activities for an income year; or
(b) if you are an * R&D partnership--an * R&D entity, who was a partner of the R&D partnership at some time while the R&D activities were conducted, is registered under that section for the R&D activities for an income year.
Note 1: R&D activities must be conducted in connection with a business carried on for the purpose of producing assessable income, see section 43 - 195.
Note 2: You may still deduct an amount under this Division if you were registered for the R&D activities under former section 39J (Registration of eligible companies) of the Industry Research and Development Act 1986 (see section 355 - 200 of the Income Tax (Transitional Provisions) Act 1997 ).
27 Paragraph 43 - 70(2)(g)
Repeal the paragraph, substitute:
(g) expenditure on property for which a deduction under section 355 - 305 or 355 - 520 is allowable for the property, or would be allowable if the property were for use for conducting * R&D activities; or
28 Subsection 43 - 70(2) (note)
Repeal the note.
29 Section 43 - 90
Omit " * research and development activities", substitute "research and development activities (within the meaning of former section 73B of the Income Tax Assessment Act 1936 )".
30 Section 43 - 90
After "research and development activities", insert "(within the meaning of that former section)".
31 Section 43 - 90 (note)
Repeal the note, substitute:
Note: There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision 43 - E (sections 43 - 155 to 43 - 195). For example, certain facilities that are not commonly provided in a hotel, motel or guest house in Australia are taken not to be used or for use to operate a hotel, motel or guest house, see subsection 43 - 180(6).
32 Section 43 - 100
Omit " * research and development activities", substitute " * core R&D activities or * supporting R&D activities".
33 At the end of section 43 - 100
Add:
Note: Core R&D activities and supporting R&D activities are kinds of R&D activities.
34 Subsection 43 - 140(1)
Omit "carrying on * research and development activities" (wherever occurring), substitute "conducting * R&D activities".
35 Subsection 43 - 140(1) (note 1)
Omit "Research and development activities must be carried on", substitute "R&D activities must be conducted".
36 Subsection 43 - 140(1) (note 2)
Omit "carrying on research and development activities", substitute "conducting R&D activities".
37 Section 43 - 195 (heading)
Repeal the heading, substitute:
43 - 195 Use for R&D activities must be in connection with a business
38 Section 43 - 195
Omit " * research and development activities", substitute " * R&D activities".
39 Section 43 - 210 (step 4)
Omit "carrying on * research and development activities", substitute "conducting * R&D activities".
40 Section 43 - 210 (note to step 4)
Omit "research and development activities", substitute "R&D activities".
41 Section 43 - 215 (step 3)
Omit "carrying on * research and development activities", substitute "conducting * R&D activities".
Part 5 -- Forgiveness of commercial debts
Division 1--Amending the new law
Income Tax Assessment Act 1997
42 Subsection 245 - 145(1) (table item 4)
Repeal the item, substitute:
4 | Expenditure deductible under Division 355 (R&D) | Division 355 of this Act |
Note: This item will not commence unless Schedule 2 to the Tax Laws Amendment (Transfer of Provisions) Act 2010 commences.
Division 2--Amending the old law
Income Tax Assessment Act 1936
43 Subsection 245 - 140(1) in Schedule 2C (table item 8 of the definition of table of deductible expenditure )
Repeal the item, substitute:
8 | Expenditure deductible under Division 355 (R&D) of the Income Tax Assessment Act 1997 | Division 355 of that Act |
Note: This item will not commence if Schedule 2 to the Tax Laws Amendment (Transfer of Provisions) Act 2010 has already commenced.
Income Tax Assessment Act 1936
44 Sections 73B to 73Z
Repeal the sections.
45 Section 94J
After "this Act", insert "and other than Division 355 of the Income Tax Assessment Act 1997 ".
46 After subsection 102T(8)
Insert:
(9) A reference in section 355 - 35 of the Income Tax Assessment Act 1997 to a body corporate is to be read as including a reference to a body corporate acting in its capacity as trustee of a public trading trust.
47 Subsection 136AB(2)
After " Income Tax Assessment Act 1997 ", insert ", and of section 355 - 400 of that Act,".
48 Subsection 170(10A)
Repeal the subsection.
49 Subsection 262A(4AC)
Omit "73E(1), 73F(1) or 73G(1) ".
50 Paragraph 262A(4AC)(a)
Omit "73E, 73F or 73G ".
51 Subsection 57 - 85(3) in Schedule 2D (table item 13)
Repeal the item, substitute:
13 | R&D | Division 355 |
|
52 Subsection 57 - 110(2) in Schedule 2D (table item 7)
Repeal the item, substitute:
7 | R&D | Sections 40 - 292, 40 - 293, 355 - 315 and 355 - 525 | Section 40 - 25, 355 - 305 or 355 - 520 |
53 At the end of subsection 57 - 110(2) in Schedule 2D
Add:
Note: Item 7 of the table is expanded by section 355 - 340 of the Income Tax (Transitional Provisions) Act 1997 .
Income Tax Assessment Act 1997
54 Section 4 - 25
Repeal the section, substitute:
4 - 25 Special provisions for working out your basic income tax liability
The following provisions may increase your basic income tax liability beyond the liability worked out simply by applying the income tax rates to your taxable income:
(a) Subdivision 355 - G;
(b) subsection 392 - 35(3).
Note 1: Subdivision 355 - G increases some entities' tax liability by requiring them to pay extra income tax on government recoupments relating to R&D activities for which entitlements to tax offsets arise under Division 355.
Note 2: Subsection 392 - 35(3) increases some primary producers' tax liability by requiring them to pay extra income tax on their averaging components worked out under Subdivision 392 - C.
55 Subsection 9 - 5(1) (after table item 4)
Insert:
4A | An entity is liable to pay extra income tax on government recoupments relating to R&D activities for which entitlements to tax offsets arise under Division 355. | Subdivision 355 - G |
56 Section 10 - 5 (table item headed "balancing adjustment")
Omit " research & development ", substitute " R&D ".
57 Section 10 - 5 (table item headed "industrial property")
Omit " research and development ", substitute " R&D ".
58 Section 10 - 5 (after table item headed "quarrying")
Insert:
R&D |
|
balancing adjustment ........................ | 40 - 292, 40 - 293, 355 - 315 and 355 - 525 |
disposal of R&D results ...................... | 355 - 410 |
feedstock adjustment ........................ | 355 - 465 |
59 Section 10 - 5 (table item headed "research & development")
Repeal the item.
60 Section 12 - 5 (table item headed "balancing adjustment")
Omit " research & development and ", substitute " R&D and".
61 Section 12 - 5 (table item headed "industrial property")
Omit " research and development ", substitute " R&D ".
62 Section 12 - 5 (after table item headed "qualifying securities")
Insert:
R&D | Division 355 |
63 Section 12 - 5 (table item headed "research & development")
Repeal the item.
64 Section 12 - 5 (table item headed "scientific research")
Omit " research & development ", substitute " R&D ".
65 Section 13 - 1 (after table item headed "public unit trust")
Insert:
R&D | Division 355 |
66 Section 13 - 1 (table item headed "research and development")
Repeal the item.
67 Section 20 - 5 (table items 5 and 6)
Repeal the items.
68 Section 20 - 5 (at the end of the table)
Add:
9 | An R&D entity receives or becomes entitled to receive an amount: • for, or relating to, the results of R&D activities; or • attributable to it incurring expenditure on R&D activities or to its use of a depreciating asset for the purpose of conducting R&D activities; and the entity is entitled under Division 355 to a tax offset relating to those R&D activities. The amount is included in its assessable income. | 355 - 410 |
10 | You receive a recoupment from government relating to R&D activities for which entitlements to tax offsets under Division 355 arise. Extra income tax is payable on the recoupment. | Subdivision 355 - G |
69 Subsection 20 - 30(1) (after table item 1.19)
Insert:
1.19A | Division 355 | R&D |
70 Subsection 20 - 30(2) (table item 2.8)
Before " 73B, 73BA or 73BH ", insert "Former".
71 Subsection 41 - 10(2)
Repeal the subsection, substitute:
(2) Subsection 355 - 715(2) (tax offset for assets used for R&D activities) does not apply to a deduction under subsection ( 1).
72 Paragraph 41 - 10(3)(c)
Repeal the paragraph, substitute:
(c) disregard subsection 355 - 715(2) (tax offset for assets used for R&D activities).
73 Section 104 - 235 (heading)
Repeal the heading, substitute:
74 Paragraph 104 - 235(1A)(a)
Repeal the paragraph, substitute:
(a) you are an * R&D entity and you could deduct an amount under section 40 - 25 for the * depreciating asset if the following assumptions were made:
(i) despite paragraph 40 - 30(1)(c) and subsection 40 - 30(2), all intangible assets were excluded from the definition of depreciating asset in section 40 - 30;
(ii) subsection 40 - 45(2) did not, except in the case of buildings, prevent Division 40 from applying to capital works to which Division 43 applies, or to which Division 43 would apply but for expenditure being incurred, or capital works being started, before a particular day;
(iii) you satisfied any relevant requirement for deductibility under Division 40; or
75 Subsection 104 - 235(1B)
Repeal the subsection, substitute:
(1B) CGT event K7 also happens if:
(a) you are an * R&D entity; and
(b) a * balancing adjustment event occurs for a * depreciating asset you * held; and
(c) when you held the asset, you could deduct an amount under section 40 - 25 for the asset if the assumptions set out in paragraph ( 1A)(a) were made; and
(d) at some time when you held the asset:
(i) you used it other than for a taxable purpose or for the purpose of conducting * R&D activities for which you were registered under section 27A of the Industry Research and Development Act 1986 ; or
(ii) you had it installed ready for use other than for a taxable purpose.
76 At the end of subsection 104 - 235(1B)
Add:
Note: For subparagraph ( d)(i), disregard any use of the asset for the purpose of carrying on research and development activities (within the meaning of former section 73B of the Income Tax Assessment Act 1936 ): see section 104 - 235 of the Income Tax (Transitional Provisions) Act 1997.
77 Paragraph 104 - 235(4)(a)
Repeal the paragraph, substitute:
(a) the * depreciating asset covered by subsection ( 1) or (1B) is a * pre - CGT asset; or
78 Subsection 104 - 240(1)
Omit "or the section 73BA depreciating asset", substitute "covered by subsection 104 - 235(1) or (1B)".
79 Subsection 104 - 240(1) ( paragraph ( a) of the definition of sum of reductions )
Omit "in the case of the * depreciating asset", substitute "if the * depreciating asset is covered by subsection 104 - 235(1)".
80 Subsection 104 - 240(1) ( paragraph ( b) of the definition of sum of reductions )
Repeal the paragraph, substitute:
(b) if the depreciating asset is covered by subsection 104 - 235(1B)--the reductions that would have been required under section 40 - 25 on the assumption that using the asset for a * taxable purpose included using it for the purpose of conducting * R&D activities for which you were registered under section 27A of the Industry Research and Development Act 1986 .
81 Subsection 104 - 240(1) (definition of total decline )
Omit "or the section 73BA depreciating asset".
82 Subsection 104 - 240(1) (note)
Repeal the note, substitute:
Note 1: This subsection applies in a modified way if you used the asset for the purpose of carrying on research and development activities (within the meaning of former section 73B of the Income Tax Assessment Act 1936 ): see section 104 - 235 of the Income Tax (Transitional Provisions) Act 1997.
Note 2: The CGT concepts of cost base and capital proceeds are not relevant for this event.
83 Subsection 104 - 240(2)
Omit "or the section 73BA depreciating asset", substitute "covered by subsection 104 - 235(1) or (1B)".
84 Paragraphs 108 - 55(1)(a) and (b)
Repeal the paragraphs, substitute:
(a) Subdivision 40 - D; or
(b) section 355 - 315 or 355 - 525 (about R&D).
85 Paragraph 110 - 45(2)(b) (note)
Repeal the note.
86 Subsection 110 - 45(2) (table item 3)
Repeal the item.
87 Section 118 - 24 (heading)
Repeal the heading, substitute:
88 Subsection 118 - 24(1)
Omit "or a section 73BA depreciating asset (within the meaning of section 73BB of the Income Tax Assessment Act 1936 )".
89 Subsection 118 - 24(1)
After "Division 40", insert "(including that Division as it applies under Division 355)".
90 Section 118 - 35
Repeal the section, substitute:
Disregard a * capital gain or * capital loss from a * CGT event if an amount is included in your assessable income in any income year under section 355 - 410 (about disposal of R&D results) because of that CGT event.
91 Subsection 205 - 15(1) (table items 1 and 2)
After "that part of the payment that is attributable to the period during which the entity was a franking entity", insert ", less any reduction under subsection ( 4)".
92 At the end of section 205 - 15
Add:
(4) An entity's * franking credit for a payment mentioned in item 1 or 2 of the table in subsection ( 1) is reduced by the amount (if any) worked out as follows, but not below zero.
Method statement
Step 1. Identify any income years ending before the payment was made for which the entity has * received a refund of income tax.
Step 2. Add up the part (if any) of each of those refunds that is attributable to a * tax offset that is subject to the refundable tax offset rules because of section 67 - 30 (about R&D).
Step 3. Subtract any reduction under this subsection of a * franking credit for any earlier payment by the entity. (For this purpose, assume a credit reduced to zero is still a franking credit.)
93 Subsection 205 - 30(2)
Repeal the subsection, substitute:
(2) Despite item 2 of the table in subsection ( 1), no debit arises on that part of the refund that is attributable to any of the following:
(a) a payment of income tax in relation to either or both of the following:
(i) an * FHSA component;
(ii) an * RSA component;
(b) a * tax offset that is subject to the refundable tax offset rules because of section 67 - 30 (about R&D).
94 Paragraph 205 - 35(1)(b)
Repeal the paragraph, substitute:
(b) the refund of the amount, or the application of the credit, represents in whole or in part:
(i) a return to the entity of an amount paid or applied to satisfy the entity's liability to pay income tax; or
(ii) the amount remaining after applying a * tax offset that is subject to the refundable tax offset rules because of section 67 - 30 (about R&D) against the entity's basic income tax liability.
95 Subsection 205 - 35(2)
After "return", insert ", or amount remaining,".
96 Paragraph 230 - 515(2)(b)
Repeal the paragraph.
97 Paragraph 250 - 290(2)(c)
Omit "and 40 - 292", substitute ", 40 - 292 and 40 - 293".
98 Subsection 295 - 85(4) (table item 7)
Omit "Research and development", substitute "R&D".
99 Subsection 328 - 175(9)
Repeal the subsection, substitute:
Exception: assets for which previously entitled to a tax offset under the R&D provisions
(9) You cannot deduct amounts for a * depreciating asset for any period under this Subdivision if you are entitled under section 355 - 100 to a * tax offset for a deduction under section 355 - 305 for the asset for the same or an earlier period.
100 Subsection 345 - 10(4) (table item 7)
Omit "Research and development", substitute "R&D".
101 Section 701 - 5 (note 2)
Repeal the note.
102 Subsection 701 - 40(1) (note)
Repeal the note.
103 Paragraph 701 - 40(2)(d)
Repeal the paragraph.
104 Subsection 701 - 55(2)
Omit "Subdivision 328 - D, and sections 73BA and 73BF of the Income Tax Assessment Act 1936 ,", substitute "Subdivisions 328 - D and 355 - E".
105 Before Subdivision 716 - Z
Insert:
Subdivision 716 - V -- Research and Development
Table of sections
716 - 500 Head company bound by agreements binding on subsidiary members
716 - 505 History for entitlement to tax offset: joining entity
716 - 510 History for entitlement to tax offset: leaving entity
716 - 500 Head company bound by agreements binding on subsidiary members
Section 355 - 220 (about R&D activities conducted for a foreign entity) applies to the * head company of a * consolidated group as if the head company were bound by an agreement during any period that a * subsidiary member of the group is bound by the agreement.
716 - 505 History for entitlement to tax offset: joining entity
If:
(a) a company becomes a * subsidiary member of a * consolidated group; and
(b) apart from this section, things happening in relation to the company before it became a subsidiary member would, because of section 701 - 5 (the entry history rule), be taken into account as things happening in relation to the * head company for working out the head company's * aggregated turnover for the purposes of section 355 - 100 (tax offsets for R&D);
the things happening are not to be taken into account as mentioned in paragraph ( b).
716 - 510 History for entitlement to tax offset: leaving entity
If:
(a) a company ceases to be a * subsidiary member of a * consolidated group; and
(b) while the company was a subsidiary member, things happened in relation to an entity which, if section 701 - 1 (the single entity rule) were disregarded:
(i) would be * connected with the company; or
(ii) would be an * affiliate of the company; or
(iii) would have the company as an affiliate; and
(c) those things would, if section 701 - 1 were disregarded, have been taken into account in working out the company's * aggregated turnover for the purposes of section 355 - 100 (tax offsets for R&D); and
(d) the things are not also things that, because of section 701 - 40 (the exit history rule), are taken into account as things happening in relation to an eligible asset etc. (within the meaning of that section) of the company in working out for the entity core purposes the company's aggregated turnover for the purposes of section 355 - 100;
the things are to be taken into account in working out the company's aggregated turnover for the purposes of section 355 - 100.
106 Subsection 995 - 1(1) ( paragraph ( e) of the definition of capital allowance )
Omit "films); or", substitute "films).".
107 Subsection 995 - 1(1) ( paragraph ( f) of the definition of capital allowance )
Repeal the paragraph.
Income Tax (Transitional Provisions) Act 1997
108 Subsection 118 - 24A(1)
Before "subsection 73B(1)", insert "former".
Taxation Administration Act 1953
109 Paragraph 14ZW(1)(bc)
Repeal the paragraph.
110 Subsection 286 - 75(3) in Schedule 1
Repeal the subsection.
111 Paragraph 286 - 80(2)(b) in Schedule 1
Repeal the paragraph.
