• Definitions

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Adjustment amount year zero (AA0)

    AA0 is the abbreviation used to denote a group's adjustment amount for the Y0 year of income (subsection 73P(2) of ITAA 1936).

    Adjustment amount year minus one (AA-1)

    AA-1 is the abbreviation used to denote a group's adjustment amount for the Y-1 year of income (subsection 73P(2) of ITAA 1936).

    Aggregate R&D amounts

    Subsection 73B(1) defines the expenditures and deductions that comprise aggregate research and development (R&D) amount.

    To claim the additional 25% concession this amount (or a grossed-up amount where a subsidiary company has joined or left a consolidated group and has a non-membership period of less than 365 days) needs to be more than $20,000. However, payments to an registered research agency (RRA) are not subject to this threshold.

    To be eligible to claim the R&D tax offset the aggregate R&D amount must be $1,000,000 or less.

    Balancing adjustment event

    A balancing adjustment event occurs when an asset is disposed of, lost or destroyed after being used exclusively for carrying on R&D activities.

    Current year (AA-1)

    The current year is the year of income for which the company tax return is being completed. For most companies the current year is 2006-07. Y0 is the abbreviation used to denote the current year.

    Incremental expenditure

    Incremental expenditure means expenditure that is R&D expenditure except:

    • expenditure to lease or hire plant, and
    • expenditure under a contract to the extent that it is, in substance, for the acquisition of plant and not for the provision of services (subsection 73P(2) of ITAA 1936).

    Previous year (Y-1)

    For 2006-07 the previous year is the 2005-06 income year. Y-1 is the abbreviation used to denote that previous year.

    R&D spend

    R&D spend of an eligible company for a year of income means the sum of:

    • the incremental expenditure of the eligible company for the year of income incurred during its group membership period, and
    • the incremental expenditure of each group member of the eligible company for the year of income incurred during its group membership period (subsection 73P(2) of ITAA 1936).

    Running average (RA0)

    RA0 is the abbreviation used to denote the group's running average for the Y0 income year (subsections 73P(2) and 73U(1) of ITAA 1936).

    Running average (RA-1)

    RA-1 is the abbreviation used to denote the group's running average for the Y-1 income (subsections 73P(2) and 73U(2) of ITAA 1936).

    Total group mark-up

    The total group mark-up is the sum of the amounts derived by persons during the year of income for goods and services in respect of all or part of the things for which the R&D amount was for while those persons were grouped with the eligible company mentioned in section 73L less the actual cost to those persons of providing those goods or services (subsection 73B(14AC) of ITAA 1936).

    Year Y-2 (Y-2)

    For the 2006-07 current year of income, Y-2 is the abbreviation used for the 2004-05 year of income.

    Year Y-3 (Y-3)

    For the 2005-06 current year of income, Y-3 is the abbreviation used for the 2003-04 year of income.

    Last modified: 24 Jun 2008QC 18884