• Item 8 R&D assets - Balancing adjustment losses

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    Write at item 8 'R&D assets - Balancing adjustment losses' the amount of balancing adjustment losses you are eligible to notionally deduct under sections 355-315 or 355-525 of the ITAA 1997, for assets used only for R&D activities.

    Separate the amount shown at item 8 between Australian owned R&D activities (label O) and foreign owned R&D activities (label P).

    You cannot claim these amounts on R&D activities unless your total notional deduction amount is at least $20,000.

    Balancing adjustment losses for assets used for both R&D and non-R&D activities are deductible under sections 40-285, 40-292 or 40-293 of the ITAA 1997 and do not qualify as notional deductions for the purposes of claiming an R&D tax offset.

    Show at item 7 label X 'Other deductible expenses' on page 6 of the Company tax return 2012, your deduction for balancing adjustment losses where the assets have been used for both R&D and non-R&D activities.

    If the company is otherwise eligible for an R&D tax offset under section 355-100 of the ITAA 1997 in the current year, the amount shown at X 'Other deductible expenses' is calculated and claimed at an uplifted percentage (equivalent to the benefit you would have obtained as the R&D tax offset to which you are entitled) under sections 40-292 or 40-293 of the ITAA 1997.

    If the company is not otherwise eligible for an R&D tax offset under section 355-100 of the ITAA 1997, the balancing adjustment losses for assets used on both R&D and non-R&D activities, as calculated under section 40-285 of the ITAA 1997, are included at X 'Other deductible expenses' item 7. This amount is not eligible to be uplifted and is therefore claimed at 100%.

    Assessable balancing adjustment amounts (as a result of balancing adjustment profits) for assets used in R&D activities are included at B 'Other assessable income' item 7 on page 5 of the Company tax return 2012.

    If the asset has only been used for R&D activities, the assessable amount to be included at this label is uplifted by one third (as per subsection 355-315(3) of the ITAA 1997).

    If the asset has been used partly for R&D activities, under subsection 40-292(5) of the ITAA 1997, the amount included and uplifted by one third is the proportion of the assessable balancing adjustment amount that relates to notional deductions claimed under the R&D tax incentive.

    Further Information

    For further information about what amounts may be claimed as 'Balancing Adjustment Losses' see Balancing adjustments for assets used for conducting R&D activities in our guide Research and development tax incentive - amounts you can claim.

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    Last modified: 21 Dec 2012QC 26005