Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Application provisions
1 Application of repeals and amendments
(1) The repeals and amendments made by this Act apply:
(a) so far as they affect assessments--to assessments for income years commencing on or after 1 July 2011 ; and
(b) so far as they relate to income years but do not affect assessments--to income years commencing on or after 1 July 2011 ; and
(c) otherwise--to acts done or omitted to be done, states of affairs existing, or periods ending on or after the commencement of the first income year commencing on or after 1 July 2011 .
Note: For the purposes of an assessment for an income year commencing on or after 1 July 2011 , regard may still be had to acts done or omitted to be done, states of affairs existing, or periods ending during an earlier income year. For example, regard may be had to expenditure incurred by other entities in income years commencing before 1 July 2011 for the purposes of paragraph 355 - 415(1)(b) of the Income Tax Assessment Act 1997 .
(2) However, each of the following applies in relation to the 2011 - 12 financial year and all later financial years:
(a) section 29E of the Industry Research and Development Act 1986 (as inserted by Schedule 2);
(b) the repeal of paragraph 39H(b) of the Industry Research and Development Act 1986 ;
(c) section 46 of the Industry Research and Development Act 1986 (as amended by this Act).
Part 2 -- General savings provisions
2 Object
The object of this Part is to ensure that, despite the repeals and amendments made by this Act, the full legal and administrative consequences of:
(a) any act done or omitted to be done; or
(b) any state of affairs existing; or
(c) any period ending;
before such a repeal or amendment applies, can continue to arise and be carried out, directly or indirectly through an indefinite number of steps, even if some or all of those steps are taken after the repeal or amendment applies.
3 Making and amending assessments, and doing other things etc., in relation to past matters
(1) Even though a provision is repealed or amended by this Act, the repeal or amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003 ):
(a) making or amending an assessment (including under a provision that is itself repealed or amended);
(b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended);
in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.
Note: Examples of things covered by this subitem are as follows:
(a) an eligible company may object under Part IVC of the Taxation Administration Act 1953 in an income year commencing on or after 1 July 2011 about a notice given under former section 73I of the Income Tax Assessment Act 1936 for an income year commencing before 1 July 2011 ;
(b) an eligible company seeking registration under former section 39J of the Industry Research and Development Act 1986 for an income year commencing before 1 July 2011 may do so during an income year commencing on or after 1 July 2011 ;
(c) Innovation Australia may give a certificate under former section 39M of the Industry Research and Development Act 1986 in an income year commencing on or after 1 July 2011 about research and development activities registered for an income year commencing before 1 July 2011 .
(2) Even though a provision is repealed or amended by this Act, the repeal or amendment is disregarded so far as it relates to a state of affairs:
(a) that exists after the repeal or amendment applies; and
(b) that relates to:
(i) an act done or omitted to be done; or
(ii) a state of affairs existing; or
(iii) a period ending;
before the repeal or amendment applies.
Note: Examples of things covered by this subitem are as follows:
(a) an amount may be included in an eligible company's assessable income under former subsection 73BF(4) of the Income Tax Assessment Act 1936 for an income year commencing on or after 1 July 2011 if the company receives in that income year an amount for the results of research and development activities for which the company had deductions under former section 73BA of that Act in an income year commencing before 1 July 2011 ;
(b) an eligible company's deduction under section 73B of the Income Tax Assessment Act 1936 for expenditure incurred during an income year commencing before 1 July 2011 is reduced because of section 73C of that Act if, in an income year commencing on or after 1 July 2011 , the company receives a recoupment of that expenditure from the Commonwealth.
(3) To avoid doubt, this item extends to the repeal of subsection 286 - 75(3), and paragraph 286 - 80(2)(b), in Schedule 1 to the Taxation Administration Act 1953 . In particular, if, in a particular case, the period in respect of which an administrative penalty is payable under subsection 286 - 75(3) in that Schedule:
(a) has not begun; or
(b) has begun but not ended;
when those provisions are repealed, then, despite the repeal, those provisions continue to apply in the particular case until the end of the period.
4 Saving of provisions about effect of assessments
If a provision or part of a provision that is repealed or amended by this Act deals with the effect of an assessment, the repeal or amendment is disregarded in relation to assessments made, before or after the repeal or amendment applies, in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.
5 Repeals disregarded for the purposes of dependent provisions
If the operation of a provision (the subject provision ) of any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003 ) made under any Act depends to any extent on a provision that is repealed by this Act, the repeal is disregarded so far as it affects the operation of the subject provision.
6 Schedule does not limit operation of the Acts Interpretation Act 1901
This Schedule does not limit the operation of the Acts Interpretation Act 1901 .
Part 3 -- Transitional provisions appearing as amendments of other Acts
Income Tax Assessment Act 1997
7 Subsection 40 - 75(2) (note)
Omit "Note", substitute "Note 1".
8 At the end of subsection 40 - 75(2)
Add:
Note 2: You may also adjust the formula for an income year if you had undeducted core technology expenditure for the asset at the end of your last income year commencing before 1 July 2011 (see section 355 - 605 of the Income Tax (Transitional Provisions) Act 1997 ).
9 Subsection 40 - 85(2) (note)
Repeal the note, substitute:
Note: The opening adjustable value of a depreciating asset may be modified by one of these provisions:
(a) Subdivision 27 - B;
(b) subsection 40 - 90(3);
(c) subsection 40 - 285(4);
(d) paragraph 40 - 365(5)(b);
(e) section 775 - 70;
(f) section 775 - 75;
(g) section 355 - 605 of the Income Tax (Transitional Provisions) Act 1997.
Income Tax (Transitional Provisions) Act 1997
10 After section 40 - 65
Insert:
40 - 67 Methods for working out decline in value
(1) Subsections 40 - 65(6) and (7) of the Income Tax Assessment Act 1997 apply with the changes set out in this section if either or both of the following events have happened:
(a) you have deducted one or more amounts under former section 73BA of the Income Tax Assessment Act 1936 for an asset;
(b) you could have deducted one or more amounts under that former section for the asset if you had not chosen tax offsets under former section 73I of that Act.
(2) Assume:
(a) paragraph 40 - 65(6)(a) of the Income Tax Assessment Act 1997 included both events set out in subsection ( 1) of this section; and
(b) subsections 40 - 65(6) and (7) of that Act deal with all 4 kinds of events in a corresponding way to the way that they deal with 2 kinds of events.
11 At the end of Subdivision 40 - B
Add:
40 - 105 Calculations of effective life
(1) This section applies to the following (the instrument ):
(a) a determination under section 40 - 100 of the Income Tax Assessment Act 1997 of the effective life of an asset;
(b) a calculation under section 40 - 105 of that Act of the effective life of an asset;
if the instrument was in force immediately before the commencement of Schedule 1 to the Tax Laws Amendment (Research and Development) Act 201 1 .
(2) The instrument has effect, after that commencement, as if it had been made under that section as amended by the Tax Laws Amendment (Research and Development) Act 201 1 .
12 After section 40 - 290
Insert:
40 - 292 Balancing adjustment--assets used for both general tax purposes and R&D activities
R&D entity has old law R&D decline in value deductions
(1) This section applies to an R&D entity if:
(a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by the R&D entity and:
(i) the R&D entity can deduct, for an income year, an amount under section 40 - 25 of the Income Tax Assessment Act 1997 (the new Act ), as that section applies apart from Division 355 of that Act and former section 73BC of the Income Tax Assessment Act 1936 (the old Act ); or
(ii) the R&D entity could have deducted, for an income year, an amount as described in subparagraph ( i) if it had used the asset; and
(b) either or both of the following subparagraphs apply:
(i) the R&D entity can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset;
(ii) the R&D entity chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset.
Note: This section applies even if the R&D entity is entitled under section 355 - 100 of the new Act to tax offsets for one or more income years for deductions under section 355 - 305 of that Act for the asset.
Section 40 - 290 to be applied as if use for carrying on R&D activities were use for a taxable purpose
(2) In applying section 40 - 290 of the new Act (including references in that section to the reduction of deductions under section 40 - 25 of that Act) in relation to the asset, assume that using the asset for a taxable purpose includes using it for:
(a) the purpose of the carrying on, by or on behalf of the R&D entity, of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; or
(b) if the R&D entity is entitled under section 355 - 100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355 - 305 of that Act for the asset--the purpose of conducting the R&D activities to which the new law 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 entity can deduct for the asset under section 40 - 285 of the new Act (after applying subsection ( 2) of this section) for the event year; or
(b) that is included in the R&D entity's assessable income for the asset under section 40 - 285 of the new Act (after applying subsection ( 2) of this section) for the event year;
is taken to be increased under section 40 - 292 of the new Act by 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 entity's assessable income--so much of the section 40 - 285 amount as does not exceed the total decline in value.
"old law 1.25 rate" deductions means the sum of the R&D entity's notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions.
"total decline in value" means the cost of the asset less its adjustable value.
Normal rules do not apply for the asset and the event
(4) Neither of the following sections:
(a) section 40 - 292 of the new Act (as amended by the Tax Laws Amendment (Research and Development) Act 201 1 );
(b) section 40 - 292 of the new Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 201 1 );
to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event.
Note 1: The section 40 - 292 of the new Act mentioned in paragraph ( a) would otherwise apply for the event in a case where the R&D entity had new law deductions.
Note 2: The section 40 - 292 of the new Act mentioned in paragraph ( b) would otherwise apply for the event in respect of the old law deductions.
Partners have old law R&D decline in value deductions
(1) This section applies to an R&D partnership if:
(a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by the R&D partnership and:
(i) the R&D partnership can deduct, for an income year, an amount under section 40 - 25 of the Income Tax Assessment Act 1997 (the new Act ), as that section applies apart from Division 355 of that Act and former section 73BC of the Income Tax Assessment Act 1936 (the old Act ); 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) either or both of the following subparagraphs apply:
(i) one or more partners of the R&D partnership can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act amounts for one or more income years for the asset;
(ii) one or more partners of the R&D partnership choose tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset.
Note: This section applies even if the partners are entitled under section 355 - 100 of the new Act to tax offsets for one or more income years for deductions under section 355 - 520 of that Act for the asset.
Section 40 - 290 to be applied as if use for carrying on R&D activities were use for a taxable purpose
(2) In applying section 40 - 290 of the new Act (including references in that section to the reduction of deductions under section 40 - 25 of that Act) in relation to the asset, assume that using the asset for a taxable purpose includes using it for:
(a) the purpose of the carrying on, by or on behalf of the R&D partnership, of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; or
(b) if one or more partners of the R&D partnership are entitled under section 355 - 100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355 - 520 of that Act for the asset--the purpose of conducting the R&D activities to which the new law 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 of the new Act (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 of the new Act (after applying subsection ( 2) of this section) for the event year;
is taken to be increased under section 40 - 293 of the new Act by 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.
"old law 1.25 rate" deductions means the sum of the partners' notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions.
"total decline in value" means the cost of the asset less its adjustable value.
Normal rules do not apply for the asset and the event
(4) Section 40 - 293 of the new Act, to the extent that it would otherwise apply apart from this section to the R&D partnership or its partners for the event, does not so apply to the R&D partnership and the partners for the event.
Note: Section 40 - 293 of the new Act would otherwise apply for the event in a case where the partners had new law deductions.
13 After section 40 - 420
Insert:
40 - 430 Allocating assets to low - value pools
For the purposes of Subdivision 40 - E of the Income Tax Assessment Act 1997 , you cannot allocate a depreciating asset to a low - value pool if:
(a) you can deduct an amount for the asset under former section 73BA of the Income Tax Assessment Act 1936 ; or
(b) you could so deduct an amount if you had not chosen a tax offset under former section 73I of that Act;
for a period before, or starting at the same time as, the allocation has effect.
14 After section 104 - 205
Insert:
104 - 235 CGT event K7: asset used for old law R&D activities
Section applies if asset used for old law R&D activities
(1) This section applies to an R&D entity if:
(a) a balancing adjustment event happens in an income year commencing on or after 1 July 2011 for an asset held by the R&D entity; and
(b) at some time when the R&D entity held the asset, it used the asset for the purpose of the carrying on by or on its behalf of research and development activities (within the meaning of former section 73B of the Income Tax Assessment Act 1936 ).
Changed application of sections 104 - 235 and 104 - 240
(2) Sections 104 - 235 and 104 - 240 of the Income Tax Assessment Act 1997 (the new Act ) apply to the R&D entity for the event as if:
(a) a reference in those sections to the purpose of conducting R&D activities for which you were registered under section 27A of the Industry Research and Development Act 1986 ;
included:
(b) a reference to the purpose described in paragraph ( 1)(b) of this section.
Normal rules do not apply for the asset and the event
(3) Neither of the following sections:
(a) sections 104 - 235 and 104 - 240 of the new Act (as amended by the Tax Laws Amendment (Research and Development) Act 201 1 );
(b) sections 104 - 235 and 104 - 240 of the new Act (as those sections apply because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 201 1 );
to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event.
Note 1: The sections described in paragraph ( a) would otherwise apply for the event in a case where the R&D entity had used the asset for the purpose of conducting R&D activities for which it was registered under section 27A of the Industry Research and Development Act 1986 .
Note 2: The sections described in paragraph ( b) would otherwise apply in respect of the purpose described in paragraph ( 1)(b) of this section.
15 After Division 328
Insert:
Division 355 -- Research and Development
Table of Subdivisions
355 - D Registr ation for activities before 2011 - 12 income year
355 - E Balancing adjustments for decline in value deductions for assets used in R&D activities
355 - F Integrity rules
355 - K Modified application of the old R&D law
355 - M Undeducted core technology expenditure
Subdivision 355 - D -- Registration for activities before 2011 - 12 income year
Table of sections
355 - 200 Registration for activities before 201 1 - 1 2 income year
355 - 200 Registration for activities before 2011 - 12 income year
A reference in each of the following provisions of the Income Tax Assessment Act 1997 to a registration under section 27A of the Industry Research and Development Act 1986 includes a reference to a registration under former section 39J of that Act:
(a) paragraph 43 - 35(a);
(b) subparagraph 355 - 205(1)(a)(i);
(c) subparagraph 355 - 215(b)(ii);
(d) subparagraph 355 - 220(1)(b)(ii);
(e) subparagraph 355 - 480(1)(a)(i);
(f) paragraph 355 - 580(1)(b).
Table of sections
355 - 320 Balancing adjustment--assets only used for R&D activities
355 - 325 Balancing adjustment--R&D partnership assets only used for R&D activities
355 - 320 Balancing adjustment--assets only used for R&D activities
R&D entity has old law R&D decline in value deductions
(1) This section applies to an R&D entity if:
(a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by the R&D entity; and
(b) the R&D entity cannot deduct an amount under section 40 - 25 of the Income Tax Assessment Act 1997 (the new Act ), as that section applies apart from:
(i) Division 355 of that Act; and
(ii) former section 73BC of the Income Tax Assessment Act 1936 (the old Act );
for the asset for an income year; and
(c) either or both of the following subparagraphs apply:
(i) the R&D entity can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset;
(ii) the R&D entity chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset; and
(d) the R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for one or more R&D activities for the event year; and
(e) if Division 40 of the new Act applied as described in subsection ( 2) of this section:
(i) the R&D entity could deduct for the event year an amount under subsection 40 - 285(2) of that Act for the asset and the balancing adjustment event; or
(ii) an amount would be included in the R&D entity's assessable income for the event year under subsection 40 - 285(1) of that Act for the asset and the balancing adjustment event.
Note 1: This section applies even if the R&D entity is entitled under section 355 - 100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355 - 305 of that Act for the asset.
Note 2: Section 40 - 292 of this Act may apply if paragraph ( c), but not paragraph ( b), of this subsection is satisfied.
Changed application of Division 40
(2) For the purposes of paragraph ( 1)(e), assume that Division 40 of the new Act applied with the changes described in section 355 - 310 of that Act, but with these changes to that section:
Changes to be made to section 355 - 310 of the new Act | ||
Item | For a reference in section 355 - 310 to... | substitute a reference to... |
1 | section 355 - 315 | this section |
2 | the purpose of conducting one or more of the R&D activities to which the R&D deductions (within the meaning of that section) relate | both: (a) the purpose of conducting one or more of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; and (b) the purpose of conducting one or more of the R&D activities to which the new law deductions (if any) relate |
Notional deduction
(3) If the R&D entity could deduct for the event year an amount under subsection 40 - 285(2) of the new Act for:
(a) the asset; and
(b) the event;
if Division 40 of that Act applied as described in subsection ( 2) of this section, the R&D entity is taken to be able to deduct under subsection 355 - 315(2) of the new Act that amount for the event year.
Note: The R&D entity may be entitled to a tax offset under section 355 - 100 (about R&D) of the new Act for the deduction.
Amount to be included in assessable income
(4) If an amount (the section 40 - 285 amount ) would be included in the R&D entity's assessable income for the event year under subsection 40 - 285(1) of the new Act for the asset and the event if Division 40 of that Act applied as described in subsection ( 2) of this section, the sum of:
(a) that amount; and
(b) the following amount;
is taken to be included in the R&D entity's assessable income for the event year under subsection 355 - 315(3) of the new Act:
where:
"adjusted section 40-285 amount" means so much of the section 40 - 285 amount as does not exceed the total decline in value.
"old law 1.25 rate" deductions means the sum of the R&D entity's notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions.
"total decline in value" means the asset's cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection ( 2).
Normal rules do not apply for the asset and the event
(5) Neither of the following sections:
(a) section 355 - 315 of the new Act;
(b) former section 73BF of the old Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 201 1 );
to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event.
Note 1: Section 355 - 315 of the new Act would otherwise apply for the event in a case where the R&D entity had new law deductions.
Note 2: Former section 73BF of the old Act would otherwise apply for the event in respect of the old law deductions.
355 - 325 Balancing adjustment--R&D partnership assets only used for R&D activities
Partner has old law R&D decline in value deductions
(1) This section applies to an R&D entity (the partner ) if:
(a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by an R&D partnership; and
(b) the R&D partnership cannot deduct an amount under section 40 - 25, as that section applies apart from:
(i) Division 355 of the Income Tax Assessment Act 1997 (the new Act ); and
(ii) former section 73BC of the Income Tax Assessment Act 1936 (the old Act );
for the asset for an income year; and
(c) either or both of the following subparagraphs apply:
(i) the partner can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset;
(ii) the partner chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset; and
(d) the partner is registered under section 27A of the Industry Research and Development Act 1986 for one or more R&D activities for the event year; and
(e) if Division 40 of the new Act applied as described in subsection ( 2) of this section:
(i) the R&D partnership could deduct for the event year an amount under subsection 40 - 285(2) of that Act for the asset and the balancing adjustment event; or
(ii) an amount would be included in the R&D partnership's assessable income for the event year under subsection 40 - 285(1) of that Act for the asset and the balancing adjustment event.
Note 1: This section applies even if the partner is entitled under section 355 - 100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355 - 520 of that Act for the asset.
Note 2: Section 40 - 293 of this Act may apply if paragraph ( c), but not paragraph ( b), of this subsection is satisfied.
Changed application of Division 40
(2) For the purposes of paragraph ( 1)(e), assume that Division 40 of the new Act applied with the changes described in section 355 - 310 of that Act, but with these changes to that section:
Changes to be made to section 355 - 310 of the new Act | ||
Item | For a reference in section 355 - 310 to... | substitute a reference to... |
1 | section 355 - 315 | this section |
2 | the purpose of conducting one or more of the R&D activities to which the R&D deductions (within the meaning of that section) relate | both: (a) the purpose of conducting one or more of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; and (b) the purpose of conducting one or more of the R&D activities to which the new law deductions (if any) relate |
3 | R&D entity | R&D partnership |
Notional deduction
(3) If the R&D partnership could deduct for the event year an amount under subsection 40 - 285(2) of the new Act for:
(a) the asset; and
(b) the event;
if Division 40 of that Act applied as described in subsection ( 2) of this section, the partner is taken to be able to deduct under subsection 355 - 525(2) of the new Act the partner's proportion of that amount for the event year.
Note: The partner may be entitled to a tax offset under section 355 - 100 (about R&D) of the new Act for the deduction.
Amount to be included in assessable income
(4) If an amount (the section 40 - 285 amount ) would be included in the R&D partnership's assessable income for the event year under subsection 40 - 285(1) of the new Act for the asset and the event if Division 40 of that Act applied as described in subsection ( 2) of this section, the sum of:
(a) the partner's proportion of that amount; and
(b) the following amount;
is taken to be included in the partner's assessable income for the event year under subsection 355 - 525(3) of the new Act:
where:
"adjusted section 40-285 amount" means so much of the section 40 - 285 amount as does not exceed the total decline in value.
"old law 1.25 rate" deductions means the sum of the partner's notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions.
"total decline in value" means the asset's cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection ( 2).
Normal rules do not apply for the asset and the event
(5) Neither of the following sections:
(a) section 355 - 525 of the new Act;
(b) former section 73BF of the old Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 201 1 );
to the extent that they would otherwise apply apart from this section to the partner for the event, do so apply to the partner for the event.
Note 1: Section 355 - 525 of the new Act would otherwise apply for the event in a case where the partner had new law deductions.
Note 2: Former section 73BF of the old Act may otherwise apply for the event in respect of the old law deductions.
355 - 340 Balancing adjustment--tax exempt entities that become taxable
Item 7 of the table in subsection 57 - 110(2) in Schedule 2D to the Income Tax Assessment Act 1936 applies as if the deduction rules set out in the final column of that item also included former sections 73BA and 73BH of the Income Tax Assessment Act 1936 .
Subdivision 355 - F -- Integrity rules
Table of sections
355 - 415 Expenditure reduced to reflect group mark - ups
355 - 415 Expenditure reduced to reflect group mark - ups
For the purposes of step 1 of the method statement in subsection 355 - 415(2) of the Income Tax Assessment Act 1997 , also disregard amounts that have already been taken into account under former subsection 73B(14AA) of the Income Tax Assessment Act 1936 for the R&D entity, the grouped entity and the R&D activities for an earlier income year.
Subdivision 355 - K -- Modified application of the old R&D law
Table of sections
355 - 550 Prepayments of R&D exp enditure extending into the 2011 - 12 income year
355 - 550 Prepayments of R&D expenditure extending into the 2011 - 12 income year
Advance R and D expenditure
(1) This section applies if, apart from former paragraph 73B(10)(a) of the Income Tax Assessment Act 1936 , an eligible company could deduct advance R and D expenditure in one or more income years commencing on or after 1 July 2011 .
Note: That deduction would be under former section 73B of that Act as that former section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 201 1 .
Other prepayments of R&D expenditure
(2) This section also applies if:
(a) apart from Subdivision H (prepaid expenditure) of Division 3 of Part III of the Income Tax Assessment Act 1936 , an eligible company can deduct an amount under former section 73B, 73BA, 73BH, 73QA, 73QB or 73Y of that Act for an income year commencing before 1 July 2011 ; and
(b) that Subdivision applies to the calculation of that amount; and
(c) apart from former paragraph 73B(10)(a) of that Act, the eligible company could deduct an amount, as a result of that application of that Subdivision, for an income year commencing on or after 1 July 2011 .
Note: That deduction would be under that Act as it applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 201 1 .
Changed registration requirement
(3) Former paragraph 73B(10)(a) of that Act is taken to apply to those income years commencing on or after 1 July 2011 as if the reference in that former paragraph to section 39J of the Industry Research and Development Act 1986 were a reference to section 27A of that Act.
Meaning of expressions
(4) An expression used in this section that is also used in former section 73B of the Income Tax Assessment Act 1936 has the same meaning in this section as it has in that former section.
Subdivision 355 - M -- Undeducted core technology expenditure
Table of sections
355 - 600 Scope
355 - 605 Core technology that is a depreciating asset
355 - 610 Core technology that is not a depreciating asset
This Subdivision applies to core technology (within the meaning of former section 73B of the Income Tax Assessment Act 1936 ) if:
(a) you incurred core technology expenditure (within the meaning of that former section) in an income year commencing before 1 July 2011 in relation to the core technology under one or more contracts entered into at or after the time referred to in former subsection 73B(12) of that Act; and
(b) that expenditure (the undeducted expenditure ) cannot be deducted for the last income year commencing before 1 July 2011 .
355 - 605 Core technology that is a depreciating asset
This section only applies for deductions under Division 40
(1) This section applies for the purposes of Division 40 of the Income Tax Assessment Act 1997 , other than sections 40 - 292 and 40 - 293 of that Act, if the core technology (the asset ) is a depreciating asset.
(2) Disregard this section, including its effect on the amount you can deduct under section 40 - 25 of that Act for the asset, for the purposes of working out:
(a) a deduction under any other Division of that Act for any income year; and
(b) a tax offset under any other Division of that Act for any income year.
Changes made by this section
(3) The asset's opening adjustable value for the first income year that commences on or after 1 July 2011 (the first new income year ) is equal to the amount of the undeducted expenditure.
(4) Subsection 40 - 75(2) of the Income Tax Assessment Act 1997 applies to the asset as if the first new income year were a change year (within the meaning of that subsection).
355 - 610 Core technology that is not a depreciating asset
If the core technology is not a depreciating asset, you can deduct the undeducted expenditure in equal proportions over a period of 5 income years starting in the first income year commencing on or after 1 July 2011 .
Part 4 -- Other savings and transitional provisions
16 R&D activities registered under the old law
A reference in each of the following provisions of the Industry Research and Development Act 1986 (as amended by this Act) to a registration under section 27A of that Act includes a reference to a registration under former section 39J of that Act:
(a) subparagraph 27A(3)(b)(i);
(b) subparagraph 27B(1)(c)(ii);
(c) subparagraph 27J(1)(c)(ii);
(d) paragraph 28A(1)(b);
(e) paragraph 28D(2)(b).
Note: For each of these provisions, the R&D activity registered under former section 39J will need to be a core R&D activity within the meaning of the amendments made by this Act.
17 Australian research agencies registered under the old law
(1) This item applies to an entity registered, immediately before the commencement of this item, under section 39F of the Industry Research and Development Act 1986 as an Australian research agency in respect of one or more classes (the research classes ) of Australian research and development activities.
(2) The entity is taken, immediately after the commencement of this item, to be registered under section 29A of that Act as a research service provider qualified to provide services in research fields corresponding to those research classes.
18 Regulations
(1) The Governor - General may make regulations prescribing matters:
(a) required or permitted by this Act to be prescribed; or
(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.
(2) The Governor - General may make regulations dealing with matters of a transitional, savings or application nature relating to the repeals and amendments made by this Act.
