Item 2

Warning:

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

End of attention

Salary expenditure

(relevant to Australian owned and foreign owned R&D)

At item 2 show the amount of eligible salary expenditure for employees who are actually carrying out eligible research and development activities (as defined in subsection 73B(1) of the ITAA 1936), including:

• salaries, wages, allowances, bonuses, overtime payments, penalty rate payments, annual leave, sick leave and long service leave, and
• on-costs such as contributions to a superannuation fund, premiums for workers compensation insurance and payroll tax.

You may need to apportion the expenditure incurred between research and development and non-research and development activities.

You cannot claim this type of expenditure in respect of Australian owned R&D unless your aggregate research and development amount is greater than $20,000.

You cannot claim this type of expenditure in respect of foreign owned R&D unless your expenditure on foreign owned R&D is greater than $20,000.

This item does not include:

• salary expenditure incurred in the construction of R&D plant, depreciating assets, structural improvements and buildings
• salary expenditure of R&D support staff not directly connected with the research and development activities - include those at item 3 Other R&D expenditure
• salary expenditure in respect of Australian owned R&D where your aggregate research and development amount is less than or equal to $20,000
• salary expenditure in respect of foreign owned R&D where your expenditure on foreign owned R&D is less than or equal to $20,000.

Adjust the amount of salary expenditure claimed in accordance with the prepayment provisions (sections 82KZL to 82KZMF of the ITAA 1936).

At E show the total R&D salary expenditure incurred (the base amount).

At F show any amount of R&D salary expenditure on Australian owned R&D claimable at 100%.

At G show any amount of R&D salary expenditure on Australian owned R&D claimable at 125%.

At A show any amount of salary expenditure on foreign owned R&D.

The total of the amounts at F, G and A must equal the base amount at E.

For more information, see:

• subsections 73B(1), 73B(14), 73B(14C) and 73B(14D) of the ITAA 1936
• Taxation Ruling TR 2002/1 - Income tax: research and development: plant expenditure (pre 29 January 2001)
• Research and development tax concession.