• Introduction

    Attention

    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

    These instructions will help you complete the Research and development tax incentive schedule 2014, which in turn will help you complete the items for the research and development (R&D) tax offset at item 21 of the Company tax return 2014 (NAT 0656). For more information about the R&D tax incentive, you can go to Research and development tax incentive.

    If you fill in the Research and development tax incentive schedule 2014 on your computer, the form will complete some calculations and fields for you.

    An online calculator is also available to help you complete the Research and development tax incentive schedule 2014. You can print a copy of the schedule when you have finished using the calculator. This schedule will be accepted for lodgment with an original tax return or an amendment request.

    What's new?

    At the time of publication, proposed changes to deny access to the R&D tax incentive for companies with aggregated assessable income of $20 billion or more for an income year are before the Parliament but have not become law. For further information, go to Research & development tax incentive for small-to-medium enterprises.

    Who must complete a Research and development tax incentive schedule?

    You must complete and lodge a Research and development incentive schedule 2014 if you make a claim at item 21 on your Company tax return 2014 for an R&D tax offset under the R&D tax incentive, that is, Division 355 of the Income Tax Assessment Act 1997 (ITAA 1997).

    If you have a feedstock adjustment (additional assessable income) but are not claiming an R&D tax offset in this year of income, you do not need to complete the Research and development tax incentive schedule 2014. You will still need to work out your feedstock adjustment and include it at W item 21 and B item 7 on the Company tax return 2014. See Part B of these instructions for information about how you work out your feedstock adjustment.

    Who can claim the R&D tax incentive?

    You may be entitled to claim the R&D tax incentive in your Company tax return 2014 if you are an R&D entity that has registered its R&D activities with Innovation Australia through AusIndustry for 2013–14.

    Only R&D entities can register R&D activities and claim the R&D tax offset. You are an eligible R&D entity if you are a corporation that is any of the following:

    • incorporated under an Australian law
    • incorporated under foreign law but an Australian resident for income tax purposes
    • incorporated under foreign law, and both of the following apply    
      • the corporation is a resident of a country with which Australia has a comprehensive double tax agreement which includes a definition of 'permanent establishment', and
      • the corporation carries on business in Australia through a permanent establishment as defined in the double tax agreement. It is then eligible to the extent that it carries on business through that permanent establishment.
       

    You are not eligible for the R&D tax incentive if you are:

    • an individual
    • a corporate limited partnership
    • an exempt entity (because your entire income is exempt from income tax).

    Trusts are not generally eligible R&D entities. The exception is a body corporate in the capacity of trustee for a public trading trust.

    Find out more

    For more information, see Research and development tax incentive – who can claim.

    End of find out more

    You must register before claiming

    You must register before you make a claim for the R&D tax incentive on the company's tax return. You must lodge an application for registration of the activities with Innovation Australia within 10 months of the end of your income year. For example, if your income year ends on the 30 June, then you must register with Innovation Australia by 30 April of the following year.

    Who are the R&D activities conducted for?

    Generally, an R&D entity is only entitled to a tax offset if the R&D activities were conducted for one of the entities below:

    • the R&D entity itself
    • a foreign corporation that is    
      • connected with, or an affiliate of, the R&D entity (or the R&D entity is an affiliate of the foreign resident)
      • a resident of a country with which Australia has a comprehensive double tax agreement.
       

    R&D activities that are conducted for a foreign corporation must be conducted under a written agreement meeting certain conditions between the R&D entity and the foreign corporation.

    Additionally, if the R&D entity is a foreign corporation carrying on business through a permanent establishment in Australia, it may be entitled to an R&D tax offset if the R&D activities are conducted for the foreign corporation (and not for the permanent establishment in Australia).

    Who administers the R&D tax incentive?

    The R&D tax incentive is jointly administered by AusIndustry, part of the Department of Industry and the Australian Taxation Office (ATO).

    Find out more

    For information about how to register for the R&D tax incentive and about what R&D activities qualify for the incentive:

    For information about what amounts are eligible for the R&D tax incentive and how to claim:

    End of find out more

    Before you complete the Research and development tax incentive schedule

    Before you start to fill in the schedule, you will need to make certain calculations and complete certain parts of the Company tax return 2014.

    Six labels on the Company tax return 2014 relate to the R&D tax incentive:

    • at page 5 item 7 Reconciliation to taxable income or loss

    D Accounting expenditure in item 6 subject to R&D tax incentive

    • at page 9 item 21 Research and development tax incentive

    A Non-refundable R&D tax offset

    B Non refundable R&D tax offset carried forward from previous year

    C Non-refundable R&D tax offset to be utilised in current year

    D Non-refundable R&D tax offset to be carried forward to next year

    U Refundable R&D tax offset

    W Feedstock adjustment - additional assessable income

    • at page 11 Calculation statement

    M R&D recoupment tax

    At item 7 Reconciliation to taxable income or loss on the Company tax return 2014, complete D Accounting expenditure in item 6 subject to R&D tax incentive (to complete this item, see Preliminary calculation – Add-back of research and development (R&D) accounting expenditure).

    Find out more

    For more information on completing the labels above, see the Company tax return instructions 2014.

    End of find out more

    Total notional R&D deduction amount

    Using Part A of these instructions, calculate your total notional R&D deduction amount to determine whether the company can claim an R&D tax offset. To be eligible to claim an R&D tax offset, the company's total notional deductions at Part A must be at least $20,000. If your total notional deductions are less than $20,000, you will only be able to obtain the R&D tax offset for:

    • expenditure incurred to a Research Service Provider (RSP) for services within a research field for which the RSP is registered under the Industry Research and Development Act 1986 (IR&D Act), when that RSP isn't an associate of the R&D entity
    • expenditure incurred as a monetary contribution under the Cooperative Research Centre (CRC) program.

    Do not complete a schedule unless any of the following apply:

    • your total notional deductions are at least $20,000
    • you have incurred expenditure to a RSP, or
    • you have made a monetary contribution under the CRC program.

    If you do not have to complete a schedule and you have a feedstock adjustment or clawback adjustment to make, you must record this on the company tax return:

    Feedstock adjustment: item 21, W Feedstock adjustment – additional assessable income and item 7, B Other assessable income.

    Clawback adjustment: Calculation statement, label M R &D recoupment tax.

     

    Expenditure to associates

    Under the R&D tax incentive, you can only obtain an R&D tax offset for expenditure incurred to an associate when that amount is paid. Before completing the Research and development tax incentive schedule, you will need to determine which amounts you have paid to associates; see Part D – R&D expenditure to associates.

    Consolidated groups

    The amounts used in the calculation of the R&D tax incentive for consolidated groups must be worked out on a consolidated basis, with all intra-group transactions eliminated. They must not be calculated on an aggregated basis, by simply adding together the expenditure of each company in the group.

    Only one Research and development tax incentive schedule is required for a consolidated group, to be completed by the head company.

    Clawback adjustment

    A clawback adjustment will apply if both of the following apply:

    • you claimed a notional deduction under the R&D tax incentive
    • you received, or have become entitled to receive, a government recoupment such as a grant or reimbursement that relates to this expenditure.

    The government recoupment may be from an Australian Government agency or a state or territory body.

    Under subdivision 355-GExternal Link of the ITAA 1997, the income tax you are liable to pay on the recoupment will be increased. This is referred to as a clawback adjustment and is recorded at the Calculation statement, label M, R&D recoupment tax on the Company tax return 2014.

    If a clawback adjustment applies, read Part C – Clawback – R&D recoupment tax.

    Find out more

    For more information about how this amount is calculated, see Research and development tax incentive – clawback adjustment.

    End of find out more

    Prepayments

    Adjust the amount of expenditure incurred in accordance with the prepayment provisions in sections 82KZLExternal Link to 82KZMFExternal Link of the Income Tax Assessment Act 1936 (ITAA 1936).

    Find out more

    For more information, see Deductions for prepaid expenses 2014 (NAT 4170).

    End of find out more

    Expenditure incurred while not at arm's length

    Adjust the amount of expenditure incurred in accordance with the rules in section 355-400External Link of the ITAA 1997 if any of this expenditure was incurred while not dealing at arm's length, or to an associate (as defined in section 318 of the ITAA 1936).

    If you incur expenditure to either an associate or another party with which you are not dealing at arm's length and the expenditure incurred exceeds the market value of the relevant R&D activity, the amount eligible for a notional R&D deduction is treated as being the market value of the R&D activity.

    Intra-group markups

    The amount that a company can claim as a notional R&D deduction is reduced to reflect mark-ups between connected or affiliated entities.

    Before completing the schedule you need to calculate your reduction amount as per subsection 355-415(2)External Link of the ITAA 1997.

    Overseas expenditure

    Companies wishing to claim a notional deduction for overseas R&D activities under Division 355 of the ITAA 1997 must have a positive overseas finding from Innovation Australia before they can make a claim. Sections 28C and 28D of the Industry Research and Development Act 1986 (IR&D Act) provide information on findings about activities to be conducted outside Australia, including conditions that must be met.

    Find out more

    For more information about the location of your R&D activities, go to ausindustry.gov.auExternal Link and search for:

    • Research and development tax incentive – overview
    • R&D Tax Incentive – Overseas R&D.
    End of find out more

    Depreciating assets

    Determine amounts that are notionally deductible for depreciating assets under subdivision 355-EExternal Link or section 355-520External Link of the ITAA 1997, in relation to your R&D activities.

    Find out more

    For more information, see the Guide to depreciating assets 2014 (NAT 1996).

    End of find out more

    Grouping rules

    You need to consider the grouping rules to work out whether your company qualifies for the refundable or non-refundable tax offset, including whether it is an R&D entity that:

    • meets the aggregated turnover threshold, which is calculated on a 'group' basis, or
    • is controlled by one or more exempt entities.

    Expenditure that is not at risk

    As per section 355-405External Link of the ITAA 1997, a company cannot claim a notional deduction for expenditure if it is not at risk in respect of that expenditure. Apply section 355-405 of the ITAA 1997 to reduce your notional deductions by any amount for which the company was not at risk.

    Core technology expenditure

    Expenditure incurred in acquiring technology that is core technology cannot be claimed under the R&D tax incentive.

    There are special transitional arrangements covering undeducted core technology expenditure (previously deductible under the R&D tax concession).

    These arrangements will help ensure that any undeducted core technology expenditure is eligible for deduction, even though such deductions are not taken into account in calculating the amount of any tax offset a company might be entitled to under the R&D tax incentive.

    The rules outlined below apply irrespective of whether the company continues to use the core technology for eligible R&D activities after 1 July 2011.

    If the core technology is a depreciating asset (for example, a patent) the provisions in Division 40External Link of the ITAA 1997, for deducting amounts for depreciating assets, will apply on the basis that the opening adjustable amount is the amount of undeducted expenditure in relation to the asset.

    If the core technology is not a depreciating asset, the undeducted expenditure is deductible in equal proportions over five income years, starting in the first income year beginning on or after 1 July 2011.

    Undeducted core technology amounts, claimed under the transitional rules, should be shown at item 7, X Other deductible expenses in the Company tax return2014.

    Building expenditure

    Expenditure is ineligible to be notionally deducted under the R&D tax incentive if it is incurred to acquire or construct either:

    • a building or a part of a building, or
    • an extension, alteration or improvement to a building.

    Interest expenditure

    Expenditure incurred for interest (within the meaning of subsection 128A(1AB)External Link of the ITAA 1936) payable to an entity is ineligible to be notionally deducted under the R&D tax incentive.

    Goods and services tax (GST)

    Adjust expenditure amounts to exclude any GST input tax credits to which you are entitled (see Division 27External Link of the ITAA 1997).

    Lodging the schedule

    For information on how to lodge your schedule, see Lodgment.

    Complete all items that apply to your company, including yes or no items. If an item or label (other than a yes or no item) does not apply, leave it blank unless otherwise instructed.

    Completing the Research and development tax incentive schedule

    Filling in the top of page 1

    Original or amended schedule

    If the company has already lodged a Research and development tax incentive schedule for 2013–14, place an X in the box at the right of Amended schedule. If it hasn't, place an X in the box at the right of Original.

    Company name

    Enter the name of the company. The name shown on the Research and development tax incentive schedule must be the same as that shown on the company's tax return.

    Tax file number (TFN)

    Enter the TFN of the company lodging the schedule and company tax return. The TFN shown on the Research and development tax incentive schedule must be the same as that shown on the company's tax return.

    AusIndustry – Innovation Australia number

    Enter the AusIndustry – Innovation Australia registration number issued to the company for registered R&D activities for this income year. If you are only claiming expenditure incurred to an associate in an earlier income year that has been paid in the current year, you will need to include your AusIndustry – Innovation Australia registration number for the income year that registration was obtained for the related R&D activities. If your company is part of a consolidated group, only the head company should apply for registration under the R&D tax incentive.

    Australian business number (ABN)

    Enter the company's ABN.

    Preliminary calculation – Add back of research and development (R&D) accounting expenditure

    At D Preliminary calculation enter the total of amounts written at the expenditure labels in item 6 Calculation of total profit or loss on the Company tax return 2014 that relate to amounts that you are claiming as a notional R&D deduction under the R&D tax incentive provisions. Generally, these amounts include expenditure for accounting purposes on R&D activities, which are used in calculating the R&D tax offset, rather than being claimed as allowable deductions.

    The Income and Expenses amounts written at item 6 Calculation of total profit or loss are accounting system amounts that correspond to the amounts in your financial statements for the income year. Do not include accounting fees here.

    At D Preliminary calculation you also need to include amounts that you have written at the expenditure labels in item 6 Calculation of total profit or loss on the Company tax return 2014 which you have incurred to your associates that are not yet paid or claimed and are to be carried forward. For more information, see Part D – R&D expenditure to associates.

    The amount written at D Preliminary calculation on the Research and development tax incentive schedule must be the same as the amount written at item 7, D Accounting expenditure in item 6 subject to R&D tax incentive on the Company tax return 2014.

    If you have not written expense amounts for R&D deductions and R&D expenditure to associates to be carried forward at item 6 Calculation of total profit or loss on the company tax return (if, for example, those amounts are capitalised for accounting purposes) enter 0 (zero) at:

    • D Preliminary calculation on the Research and development tax incentive schedule, and
    • item 7, D Accounting expenditure in item 6 subject to R&D tax incentive on the Company tax return 2014.

    Part A – Calculation of notional R&D deduction

    Show the notional R&D deduction amounts at Part A in whole dollars only. Do not multiply the amounts in Part A by the offset percentage to which the company is entitled, this is done in Part E – R&D tax offset calculation.

    In allocating notional R&D deduction amounts to the items 1 to 9 in Part A, choose the item most appropriate to the expenditure or decline in value amount in question.

    Australian owned R&D column

    Enter in this column all amounts that relate to R&D activities that the company has conducted for itself where it is a corporation that is:

    • incorporated under an Australian law, or
    • incorporated under foreign law but an Australian resident for income tax purposes.

    Foreign owned R&D column

    Enter in this column all amounts that your company (an R&D entity) incurs for another company that is:

    • a foreign corporation, and
    • a resident of a country with which Australia has a comprehensive double tax agreement.

    The activities must be conducted under a written agreement between the entities.

    Additionally, enter amounts in this column for amounts incurred if the R&D entity is a foreign corporation carrying on business through a permanent establishment in Australia that can be claimed under the R&D tax incentive.

    If you are claiming amounts in this column, you will also need to consider other taxation implications in regard to your related-party international dealings. For more information, see International dealings schedule instructions and the taxation rulings referred to within that publication.

    If an R&D entity is entitled under section 355-100External Link of the ITAA 1997 to an R&D tax offset for an income year for expenditure it can notionally deduct under sections 355-205,External Link 355-480External Link or 355-580External Link of the ITAA 1997, that expenditure:

    • cannot be taken into account by any entity in working out a deduction under any provision for any income year, and
    • cannot be taken into account by any entity in working out another tax offset under any provision for any income year.

    If an R&D entity is entitled under section 355-100External Link of the ITAA 1997 to an R&D tax offset for an income year for the decline in value under sections 355-305External Link, 355-315External Link, 355-520External Link or 355-525External Link of the ITAA 1997, that decline in value (to the extent that the asset is used for the purpose of conducting R&D activities):

    • cannot be taken into account by any entity in working out a deduction under any other provision (other than section 40-292External Link or 40-293External Link of the ITAA 1997) for any income year, and
    • cannot be taken into account by any entity in working out another tax offset under any other provision for any income year.

    Do not include any amounts at Part A for building expenditure, interest expenditure, core technology expenditure, non-arm's length amounts, not-at-risk amounts, group mark up amounts or expenditure incurred, but not paid, to associates.

    Item 1 R&D expenditure – Research service provider (RSP)

    Enter at item 1 R&D expenditure – Research service provider (RSP) the expenditure you have incurred to an RSP, to the extent that it has been incurred on R&D activities.

    Apportion expenditure between R&D activities and other activities that the company undertakes and show expenditure on R&D activities only at this label.

    Separate the expenditure at item 1 between Australian owned R&D activities (label A) and foreign owned R&D activities (label B).

    In most circumstances, expenditure to an RSP is not subject to the $20,000 notional deduction threshold. You will therefore be able to claim an R&D tax offset for this expenditure, regardless of the amount. However, these rules will only apply where:

    • the RSP is not an associate of the R&D entity
    • the R&D activities are within a research field for which the RSP is registered under the IR&D Act.

    Find out more

    For more information about apportioning your expenditure between R&D activities and non-R&D activities, see Research and development tax incentive – Keeping records and calculating your notional deductions.

    End of find out more

    Item 2 R&D expenditure – Contract expenditure (not RSP)

    Enter at item 2 R&D expenditure – Contract expenditure (not RSP) the amount of expenditure you have incurred under a contract to another party (other than an RSP), to the extent that it has been incurred on R&D activities.

    Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this label.

    Separate the expenditure at item 2 between Australian owned R&D activities (label C) and foreign owned R&D activities (label D).

    Do not show any amounts at this label for expenditure incurred to an associate. If you have entered into a contract with your associate, you are only eligible to claim the amount incurred in the income year to the extent it is paid. Amounts paid to an associate are shown at Part A, item 6. You also need to provide further details of expenditure to your associates in Part D – R&D expenditure to associates.

    You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.

    Find out more

    For more information about what amounts may be claimed as 'contract expenditure', see Expenditure you incur under contract to other parties.

    For more information about apportioning your expenditure between R&D activities and non-R&D activities, see Research and development tax incentive – Keeping records and calculating your notional deductions.

    End of find out more

    Item 3 R&D expenditure – Salary expenditure

    Enter at item 3 R&D expenditure – Salary expenditure the amount of salary expenditure you have incurred for all of your employees, to the extent that it has been incurred on R&D activities.

    The amounts shown at this label include expenditure on salary and wages (and associated on costs) of:

    • managers or supervisors of research staff
    • researchers
    • technical employees
    • supervisors of research staff conducting R&D activities.

    Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this label.

    Separate the expenditure at item 3 between Australian owned R&D activities (label E) and foreign owned R&D activities (label F).

    Do not show any amounts at this label for expenditure incurred to an associate. If you incurred expenditure to your associate, you are only eligible to claim the amount incurred in the income year to the extent it is paid. Amounts paid to an associate are shown at Part A, item 6. You also need to provide further details of expenditure to your associates in Part D – R&D expenditure to associates.

    You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.

    Find out more

    For more information about what amounts may be claimed as 'salary expenditure' see Salary expenditure in our guide Research and development tax incentive – amounts you can claim.

    For more information about apportioning your expenditure between R&D activities and non-R&D activities, see Research and development tax incentive – Keeping records and calculating your notional deductions

    End of find out more

    Item 4 R&D expenditure – Other

    Enter at item 4 R&D expenditure – Other the expenditure, to the extent that it has been incurred on R&D activities, that is not required to be shown at any other item of Part A. Types of expenditure to be shown at this label may include:

    • administrative costs and overheads incurred on R&D activities
    • expenditure on overseas activities that are covered by a finding made by Innovation Australia under section 28C of the IR&D Act.

    Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this label.

    Separate the expenditure at item 4 between Australian owned R&D activities (label G) and foreign owned R&D activities (label H).

    Do not show any amounts at this label for expenditure incurred to an associate. If you incurred expenditure to your associate, you are only eligible to claim the amount incurred in the income year to the extent it is paid. Amounts paid to an associate are shown at Part A item 6. You also need to provide further details of expenditure to your associates in Part D – R&D expenditure to associates.

    You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.

    Find out more

    For more information about what amounts may be claimed as 'other', see Other R&D expenditure.

    For more information about apportioning your expenditure between R&D activities and non-R&D activities, see Research and development tax incentive – Keeping records and calculating your notional deductions.

    End of find out more

    Item 5 R&D expenditure – Feedstock input expenditure

    Enter at item 5 R&D expenditure – Feedstock input expenditure the total amount of expenditure incurred in the income year on acquiring or producing feedstock inputs that are transformed or processed during R&D activities in producing one or more tangible products (feedstock outputs).

    Feedstock input expenditure also includes:

    • the total cost of energy input directly into the transformation or processing, and
    • the decline in value of assets used in acquiring or producing the feedstock inputs to these R&D activities.

    Separate your expenditure at item 5 between Australian owned R&D activities (label I) and foreign owned R&D activities (label J).

    You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.

    An amount included in Feedstock input expenditure must not also be included at any other label in Part A.

    The amount to be shown at this label may not form part of any feedstock adjustment in the 2013–14 year. However, it will represent expenditure on feedstock inputs and should be recorded separately from the other expenditure types in Part A. It may be expenditure to be taken into account in calculating the amount of a feedstock adjustment in the current or a future year (see Part B – Feedstock).

    Find out more

    For more information about the feedstock adjustment, see

    End of find out more

    Item 6 R&D expenditure – Paid to associates in the current year

    Enter at item 6 R&D expenditure – Paid to associates in the current year the total amount of expenditure you have paid to your associates in 2013–14, to the extent that it has been incurred on R&D activities. You could include expenditure you have paid to associates in the current year that was either:

    • incurred in 2013–2014
    • incurred in earlier income years commencing on or after 1 July 2011,
    • provided you have not claimed this expenditure under other provisions of the ITAA 1936 or ITAA 1997.

    Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this label.

    Transfer this amount to Part D label E4 R&D expenditure paid to associates in the current year.

    Separate the expenditure at item 6 between Australian owned R&D activities (label K) and foreign owned R&D activities (label L).

    You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.

    If you have incurred expenditure to your associate, but it is not paid in 2013–14, do not include that amount at K or L item 6. For more information about how you treat this expenditure that is incurred but not yet paid, see Preliminary Calculation – Add back of research and development (R&D) accounting expenditure and Part D – R&D expenditure to associates.

    Find out more

    For more information about what amounts may be claimed as 'Expenditure paid to associates in the current year' see:

    For more information about apportioning your expenditure between R&D activities and non-R&D activities, see Research and development tax incentive – Keeping records and calculating your notional deductions.

    End of find out more

    Item 7 R&D assets – Decline in value

    Enter at item 7 R&D assets – Decline in value the decline in value amount notionally deductible under subdivision 355-EExternal Link and section 355-520External Link of the ITAA 1997 for depreciating assets used in R&D activities.

    Separate your decline in value amount at item 7 between Australian owned R&D activities (label M) and foreign owned R&D activities (label N).

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

    Find out more

    For more information about what amounts may be claimed for 'Decline in value' under the R&D tax incentive, see Decline in value of assets used for conducting R&D activities.

    End of find out more

    Item 8 R&D assets – Balancing adjustment losses

    Enter at item 8 R&D assets – Balancing adjustment losses the amount of balancing adjustment losses you are eligible to notionally deduct under sections 35 5-315External Link or 355-525External Link 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 40-285External Link, 40-292External Link or 40-293External Link of the ITAA 1997 and do not qualify as notional deductions for the purposes of claiming an R&D tax offset.

    Show at X Other deductible expenses item 7 on page 6 of the Company tax return 2014 your deduction for balancing adjustment losses if 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 355-100External Link 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 40-292External Link or 40-293External Link of the ITAA 1997.

    If the company is not otherwise eligible for an R&D tax offset under section 355-100External Link of the ITAA 1997, the balancing adjustment losses for assets used on both R&D and non-R&D activities, as calculated under section 40-285External Link 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 2014.

    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) or 40-293(3) 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.

    Find out more

    For more information about what amounts may be claimed as 'Balancing Adjustment Losses' see Balancing adjustments for assets used for conducting R&D activities.

    End of find out more

    Item 9 Cooperative Research Centre (CRC) contributions

    Enter at item 9 Cooperative Research Centre (CRC) contributions the amount of expenditure you have incurred as a monetary contribution under the CRC program that is spent on registered R&D activities. Separate the incurred expenditure at item 9 between Australian owned R&D activities (label Q) and foreign owned R&D activities (label R).

    Expenditure you incur as a monetary contribution under the Cooperative Research Centre (CRC) program is not subject to the $20,000 notional deduction threshold. You will therefore be able to claim an R&D tax offset for this expenditure, regardless of the amount.

    Find out more

    For more information on amounts incurred under the CRC program that you can claim, see Contributions under the CRC program.

    End of find out more

    Item 10 Total of allocated notional deductions

    Enter at X item 10 Total of allocated notional deductions the sum of the amounts shown at items 1 to 9 in the Australian owned R&D column.

    Enter at Y item 10 Total of allocated notional deductions the sum of the amounts shown at items 1 to 9 in the Foreign owned R&D column.

    Note that if you complete the form on your computer, item 10 will be calculated for you.

    Item 11 Total notional R&D deduction (X plus Y)

    Enter at Z item 11 Total notional R&D deductions (X plus Y) the sum of the amounts shown at X and Y in item 10 Total of allocated notional deductions.

    If the amount shown at Z is less than $20,000, you will only be able to claim an R&D tax offset for amounts shown at:

    • item 1 R&D expenditure – Research service provider (RSP)
    • item 9 Cooperative Research Centre (CRC) contributions.

    Note that if you complete the form on your computer, Z will be calculated for you.

    Part B – Feedstock

    A feedstock adjustment is an amount you include in your assessable income. It applies when you obtain an R&D tax incentive offset for your feedstock expenditure incurred on R&D activities, when those activities also produce tangible products for supply to someone else, or to be applied to the R&D entity's own use (other than in transforming such products for supply).

    The feedstock adjustment applies to expenditure on the following:

    • goods or materials (feedstock inputs) transformed or processed during R&D activities in producing one or more tangible products (feedstock outputs)
    • energy that is input directly into that transformation or processing.

    A feedstock adjustment may also apply in respect of amounts claimed for the decline in value of assets used in acquiring or producing feedstock inputs.

    The feedstock provisions apply to both core R&D activities and supporting R&D activities that transform or process feedstock inputs. The provisions are not confined to mass production activities.

    When a feedstock adjustment is triggered, you must include an amount in your assessable income. This may be in the current or in a future income year, depending on when the output is supplied or applied.

    You do not need to complete Part B unless your R&D activities have produced a marketable product supplied to someone else, or applied to your own use during 2013–14 (other than in transforming such a product for supply). If your R&D activities have not produced a marketable product supplied to someone else or applied to your own use, go to Part C – Clawback – R&D recoupment tax in these instructions.

    If you have a feedstock adjustment (additional assessable income) in 2013–14 but are not claiming the R&D tax offset, you do not need to complete the Research and development tax incentive schedule 2014. You will still need to work out your feedstock adjustment and include it at W item 21 and B item 7 of the Company tax return 2014. These instructions provide details about how you work out your feedstock adjustment.

    Item 1 Feedstock revenue total

    Enter at item 1 Feedstock revenue total the total amount of feedstock revenue from all R&D activities, where those activities have produced products supplied to someone else, or applied to the R&D entity's own use (other than in transforming such products for supply).

    Item 2 Expenditure on feedstock inputs attributable to feedstock output

    Enter at item 2 Expenditure on feedstock inputs attributable to feedstock output the total amount of feedstock inputs attributable to feedstock outputs on all R&D activities, if those activities have produced products supplied to someone else, or applied to the R&D entity's own use (other than in transforming such products for supply).

    Also include in the total amount written at item 2 Expenditure on feedstock inputs attributable to feedstock output the total amount of energy input directly into the transformation or processing and the decline in value of assets used in acquiring or producing the inputs to the R&D activities.

    Item 3 Feedstock adjustment – additional assessable income

    The amount to be shown at B Feedstock adjustment – additional assessable income is the total of all feedstock adjustments that are required to be made for all R&D activities, if those activities have produced products supplied to someone else, or applied to the R&D entity's own use (other than in transforming such products for supply).

    Step 1

    Determine which R&D activities have produced marketable products.

    Step 2

    For each of the R&D activities identified at step 1 above, work out each of the following amounts:

    • 2A – feedstock revenue
    • 2B – the sum of amounts claimed (in the current income year or an earlier income year) as notional deductions for:
    • feedstock inputs attributable to feedstock outputs from each of these R&D activities
    • energy input directly into the transformation or processing
    • the decline in value of assets used in acquiring or producing the feedstock inputs to these R&D activities.

    Step 3

    For each of the R&D activities identified at step 1 above, determine whether the amount calculated at step 2A is less than the amount calculated at step 2B, as the feedstock adjustment amount will be calculated as one third of the lesser amount.

    Step 4

    For each of the R&D activities identified at step 1 above, work out your feedstock adjustment amount as follows:

    • If the amount calculated at step 2A is less than the amount calculated at step 2B, divide the amount shown at step 2A by 3.
    • If the amount calculated at step 2B is less than the amount calculated at step 2A, divide the amount shown at step 2B by 3.

    Step 5

    Add together each of the amounts calculated at step 4 above. Enter the total at B item 3 Feedstock adjustment – additional assessable income.

    If you complete the form on your computer, this will be calculated for you at B item 3. Note that if you have multiple feedstock outputs, the additional assessable income may be too high. If this happens, tick the box below label B (“Check this box to overwrite the value at label B above. Uncheck to use calculation.”) and enter the correct value.

    Remember to include this amount in the Company tax return 2014 at item 21 label W Feedstock adjustment - additional assessable income and item 7 label B Other assessable income.

    Part C – Clawback – R&D recoupment tax

    If you are eligible for the R&D tax incentive and you receive a government recoupment (such as a government grant or reimbursement) that relates to expenditure that is eligible for the R&D tax incentive, clawback applies.

    Clawback does not decrease the grant or offset you receive; rather it increases the income tax you are liable to pay. This income tax increase is called a 'clawback adjustment' or 'R&D recoupment tax'.

    A clawback adjustment arises where during an income year you either receive or are entitled to receive a recoupment from an Australian government agency, or a state or territory body, and the following applies:

    • the recoupment (such as a reimbursement) relates to expenditure incurred on certain activities or the recoupment (such as a grant) requires expenditure to either be or have been incurred on certain activities
    • you are eligible for the R&D tax incentive for that expenditure (or decline in value notional deductions where the expenditure was for a depreciating asset used in those activities).

    Only complete this item if you have received a government recoupment during 2013-14 that relates to an amount you have notionally deducted at Part A Calculation of notional R&D deduction on the Research and development tax incentive schedule in the current income year or in earlier income years commencing on or after 1 July 2011.

    If you are unable to claim the R&D tax incentive for expenditure related to the recoupment because section 355-405External Link of the ITAA 1997 applies (the expenditure is not at risk), you do not need to make a clawback adjustment. If section 355-405External Link does not apply to expenditure related to the recoupment, you may still need to make a clawback adjustment.

    Find out more

    For more information about the clawback adjustments, see Research and development tax incentive – clawback adjustment

    End of find out more

    Item 1 Recoupment(s) – (entitled to/received)

    Enter at item 1 Recoupment(s) – (entitled to/received) the total amount of recoupment you have received, or become entitled to receive, (other than under the CRC program) in the current income year, that relate to notional R&D deductions for which you have claimed an R&D tax offset in the current income year or in earlier income years commencing on or after 1 July 2011.

    Item 2 R&D expenditure related to recoupment(s)

    Enter at item 2 R&D expenditure related to recoupment(s) the total amount claimed as a notional deduction under the R&D tax incentive that relates to the recoupment shown at item 1 Recoupment(s) – (entitled to/received). This may include amounts claimed as a notional deduction in the current income year or in earlier income years commencing on or after 1 July 2011. Do not include R&D expenditure that you have already taken into account to work out another clawback adjustment (extra income tax) for another recoupment. 

    Item 3 Project expenditure for which recoupment(s) paid

    Enter at item 3 Project expenditure for which recoupment(s) paid the total project expenditure for all years of the project for which the recoupment has been paid (including R&D and other amounts). You will need to consider the terms of the grant agreement to work out what your project expenditure is in respect of each recoupment. A recoupment may be an instalment under the agreement.

    When you notionally deduct further amounts related to this recoupment under the R&D tax incentive in future years, you will be required to amend your Company tax return 2014 in the Calculation statement at label M R&D recoupment tax to include a further amount of R&D recoupment tax. Further amendments will be required until either:

    • there is no more expenditure related to this recoupment, or
    • the amount of the extra tax recouped at label M R&D recoupment tax in the Calculation statement becomes equal to the amount of the government recoupment received.

    Item 4 R&D recoupment tax – 10% tax payable

    Enter at M item 4 R&D recoupment tax – 10% tax payable the extra tax required on your recoupment as calculated under Subdivision 355-GExternal Link of the ITAA 1997.

    If you have claimed the R&D tax incentive at item 21 and you have received a government recoupment (such as a government grant or reimbursement) that relates to expenditure that you have claimed a notional deduction for under the R&D tax incentive, the income tax you are liable to pay on the recoupment will be increased. This is referred to as a clawback adjustment.

    The clawback adjustment for each project is capped for grants, so that the extra tax payable cannot exceed the amount of the grant, that on a pro rata basis, you received for that project. As a result, if the sum calculated for M for each project exceeds the amount of the grant received for that project (which relates to the R&D expenditure), the amount to be shown at M for that project will be the amount of the grant.

    Part D – R&D expenditure to associates

    Under the R&D tax incentive, you can only obtain an R&D tax offset for expenditure incurred to an associate when that amount is paid. If you do not pay the amount until a later income year, you can choose to do either of the following:

    • claim a deduction under the normal income tax provisions, for example, the general deduction provision, section 8-1External Link of the ITAA 1997, for the income year in which the amount was incurred.
    • claim a notional R&D deduction in the year you make the payment.

    This choice must be made by the time the R&D entity lodges its income tax return for the most recent income year before the income year in which the payment is made.

    If you claim a deduction for this expenditure under the first choice you will no longer be entitled to claim a notional R&D deduction in the year you make the payment. This cannot be reversed, for example, you cannot later request an amendment of the assessment to disallow the deduction you previously claimed. In addition to claiming this amount as a deduction in the Company tax return 2014, you will also need to record this expenditure that you have claimed under other income tax provisions in Part D item 3.

    If you wish to claim the expenditure under the second choice, you will need to record an amount of R&D expenditure incurred to associates to be carried forward in Part D item 5. Also, if you have included the amount of R&D expenditure incurred to associates to be carried forward in item 6 Calculation of total profit or loss of the Company tax return 2014, you will need to add this amount back at D Preliminary calculation to ensure you do not also claim this amount as a deduction under the normal income tax provisions.

    Item 1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward)

    Enter at E1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward) the total amount of R&D expenditure you have incurred to your associates in earlier income years commencing on or after 1 July 2011 that has not yet been paid or claimed. This amount is carried forward from earlier income year(s).

    Item 2 Current year R&D expenditure incurred to associates

    Enter at E2 the total amount of R&D expenditure you have incurred to your associates in 2013–14, including amounts that have not yet been paid.

    Item 3 Current year R&D expenditure incurred to associates claimed under other provisions

    Enter at E3 Current year R&D expenditure incurred to associates claimed under other provisions the total amount of R&D expenditure you have incurred to your associates in 2013–14, but claimed under other provisions of the ITAA 1936 or ITAA 1997 because the amount was not paid in 2013–14.

    Danger

    If you claim a deduction for this expenditure under another provision of the ITAA 1936 or ITAA 1997, you will no longer be entitled to claim a notional R&D deduction in the year you make the payment. This choice cannot be reversed, for example, you cannot later request an amendment of the assessment to disallow the deduction you claimed.

    End of danger

    If you choose to claim your associate expenditure under another provision of the ITAA 1936 or ITAA 1997, you need to ensure that you do not add this expenditure back at D Preliminary calculation on the Research and development tax incentive schedule or D Accounting expenditure in item 6 subject to R&D tax incentive item 7 on the Company tax return 2014. Expenditure to your associate claimed under another provision of the ITAA 1936 or ITAA 1997 should be treated the same as other expenditure claimed under that provision within the Company tax return 2014.

    Item 4 R&D expenditure paid to associates in the current year

    Enter at E4 R&D expenditure paid to associates in the current year the total amount of R&D expenditure you have paid to your associates in 2013–14. This could include amounts you have incurred and paid in 2013–14, or amounts you have incurred in earlier income years commencing on or after 1 July 2011, that have been paid in 2013–14 and that you have not previously claimed as a deduction under other provisions of the ITAA 1997 or ITAA 1936. The amount at E4 should be equal to the amount you have shown at Part A item 6 R&D expenditure – Paid to associates in the current year.

    Item 5 R&D expenditure incurred to associates to be carried forward

    If you have incurred expenditure to an associate during 2013–14 or in earlier income years commencing on or after 1 July 2011, you will be entitled to carry the amount forward and claim it as a notional R&D deduction in the year you make the payment to your associate if you have not either:

    • paid the amount, or
    • claimed it under another provision of the ITAA 1936 or ITAA 1997.

    Calculate the amount to be shown at E R&D expenditure incurred to associates to be carried forward using Worksheet 1 below (note that if you complete the form on your computer, this will be calculated for you):

    Worksheet 1

    R&D expenditure incurred to associates in prior years (not paid, not claimed)

    E1

    $

    Plus current year R&D expenditure incurred

    E2

    $

    Less amount claimed under other provisions

    E3

    $

    Less amount paid and claimed in current year

    E4

    $

    E1 + E2 – E3 – E4 = E

    Expenditure to associates to be carried forward

    E

    $

    Enter the result from E on Worksheet 1 above at Part D item 5 label E R&D expenditure incurred to associates to be carried forward. Note that if you complete the form on your computer, it will be calculated for you.

    If you have already included this expenditure incurred to associates to be carried forward in item 6 Calculation of total profit or loss on the Company tax return 2014, also include this amount at D Preliminary calculation.

    Part E – R&D tax offset calculation

    The R&D tax incentive provides a targeted tax offset to encourage certain companies (R&D entities) to conduct R&D activities that benefit Australia and has the following two core components:

    • a 45% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million, unless they are controlled by one or more tax exempt entities
    • a 40% non-refundable tax offset for all other eligible entities.

    Part E of these instructions will assist you in working out which offset you are entitled to and the amount of R&D tax offset you will be able to claim at item 21 of the Company tax return 2014.

    Item 1 Exempt entity ownership

    Regardless of a company's aggregated turnover, if one or more exempt entities have direct control or indirect control of the company (with a relevant control threshold of 50%), then the company is eligible for the 40% non-refundable tax offset only.

    If your company is controlled by one or more income tax–exempt entities, place an X in the box at the right of Yes and go to Part E item 5 Non-refundable tax offset. You do not need to complete items 2, 3 and 4.

    If your company is not controlled by one or more income tax exempt entities, place an X in the box at the right of No and go to item 2.

    Item 2 Aggregated turnover

    If a company's aggregated turnover is $20 million or greater, the company is eligible for the 40% non-refundable tax offset.

    If your company has an aggregated turnover of $20 million or greater, place an X in the box at the right of Yes and go to Part E item 5 Non-refundable tax offset. You do not need to complete items 3 and 4.

    If your company has an aggregated turnover of less than $20 million, place an X in the box at the right of No. You must complete items 3 and 4 of Part E. You do not need to complete item 5.

    Item 3 Aggregated turnover less than $20 million

    At Part E item 2, if you have placed an X in the box at the right of No, you must complete item 3 and show details for your company and all entities connected with your company, or that are affiliates of yours, during 2013–14.

    Enter your company name and tax file number (at a item 3), and (if any) the names and tax file numbers of all entities that are connected with, or are affiliates of, your company at any time during the year in Part E item 3.

    Attach an additional table if you are connected or affiliated with more than three other entities.

    In the column Annual turnover, enter the amount of each entity's annual turnover, as defined in section 328-120External Link of the ITAA 1997.

    If you have used an additional table, add up the annual turnovers for each of the entities listed on the additional table and include the sum of these amounts at row e.

    To correctly calculate aggregated turnover, you will need to make an adjustment if any amounts shown in the Annual turnover column relate to:

    • ordinary income amounts derived from dealings between yourself and any entities you have listed in item 3
    • ordinary income amounts derived from dealings between two or more other entities you have listed in item 3
    • ordinary income amounts derived by entities you have listed in item 3 while they were not connected with you and were not your affiliates.

    At row f, enter the total amount included in the Annual turnover column which requires an adjustment due to the points described above.

    Calculate the amount to be shown at AT Aggregated turnover using Worksheet 2 below (note that if you complete the form on your computer, this will be calculated for you):

    Worksheet 2

    Your company turnover

    a

    $

    Connected/affiliated entity turnover

    b

    $

    Connected/affiliated entity turnover

    c

    $

    Connected/affiliated entity turnover

    d

    $

    Connected/affiliated entity turnover total from additional table

    e

    $

    Adjustments required as a result of exclusions from aggregated turnover

    f

    $

    Aggregated turnover

    (a+b+c+d+e-f)

    AT

    $

    Item 4 Refundable tax offset

    If you answered 'No' to items 1 and 2 of Part E and your notional deductions calculated under Part A label Z total $20,000 or more, you can claim the refundable tax offset. If your notional deductions calculated under Part A label Z total less than $20,000, then you are only entitled to a tax offset for notion deductions in relation to expenditure under Part A labels A and B R&D expenditure – Research service provider (RSP) and Part A labels Q and R Cooperative Research Centre (CRC) contributions.

    Enter at Z1 Total notional R&D deductions the amount shown at Z of Part A, item 11. Enter at U Refundable R&D tax offset the amount calculated by multiplying the amount shown at Z1 Total notional R&D deductions by 45%. Note that if you complete the form on your computer, this will be calculated for you.

    Transfer the amount at U to the Company tax return 2014, item 21 label U Refundable R&D tax offset.

    You do not need to complete item 5.

    Item 5 Non-refundable tax offset

    If you answered 'Yes' to item 1 or item 2 of Part E and your notional deductions calculated under Part A label Z total $20,000 or more, you can claim the non-refundable tax offset.

    If your notional deductions calculated under Part A label Z total less than $20,000, then you are only entitled to a tax offset for notion deductions in relation to expenditure under Part A labels A and B R&D expenditure – Research service provider (RSP) and Part A labels Q and R Cooperative Research Centre (CRC) contributions.

    Enter at Z2 Total notional R&D deductions the amount shown at Z of Part A, item 11. Enter at A Non-refundable R&D tax offset the amount calculated by multiplying the amount you have shown at Z2 Total notional R&D deductions by 40%. Note that if you complete the form on your computer, this will be calculated for you.

    Transfer the amount at A to the Company tax return 2014, item 21 label A Non-refundable R&D tax offset.

    Taxpayer's declaration

    If you do not lodge the schedule with your tax return, you must sign and date page 4 of the schedule.

    Definitions

    Affiliate

    An individual or company is an affiliate of your entity if, in relation to the affairs of their business, they act, or could reasonably be expected to act in either of the following ways:

    • in accordance with your entity's directions or wishes
    • in concert with your entity.

    Two or more entities in partnership are not each other's affiliates just because one partner acts or could reasonably be expected to act in concert with the other in relation to the affairs of the partnership business.

    Find out more

    What are the aggregation rules?

    End of find out more

    Aggregated turnover

    Aggregated turnover is the sum of the annual turnover for all of the following:

    • the R&D entity
    • any entity connected with the R&D entity
    • any entity affiliated with the R&D entity.

    Certain turnover amounts from dealings between these entities are excluded.

    Annual turnover

    An entity's annual turnover is the total ordinary income it derived in the income year in the ordinary course of carrying on its business activities. This amount does not include GST.

    If an entity is not carrying on a business at any time during the income year, its annual turnover is nil. If your entity carries on business for part of the income year, its annual turnover for that year must be worked out using a reasonable estimate of what its annual turnover would be if it carried on a business for the whole income year.

    Associates

    In broad terms, associates are those entities that, by reason of family or business connections, might appropriately be regarded as being associates of a particular entity.

    Some examples of an associate of a company, other than a company in the capacity of trustee, include:

    • a partner of the company or a partnership in which the company is a partner
    • a trustee of a trust estate under which the company or associate benefits
    • another entity (including a natural person) that, acting alone or with another entity or entities, sufficiently influences the company
    • an entity (including a natural person) that, either alone or together with associates, holds a majority voting interest in the company
    • a second company that is sufficiently influenced by the company or the company's associate
    • a second company in which a majority voting interest is held by the company or the company's associate.

    Find out more

    For a more detailed definition, see section 318External Link of the ITAA 1936.

    End of find out more

    Connected with an entity

    Your entity is connected with another entity if either of the following applies:

    • either entity controls the other entity
    • both entities are controlled by the same third entity.

    Find out more

    For a more detailed definition, see section 328-125 of the ITAA 1997.

    End of find out more

    Direct control

    For the purposes of working out aggregated turnoverExternal Link, broadly, your entity controls another entity if either of the following applies to your entity, its affiliates or both:

    • they own or have the right to acquire the ownership of interests in the other entity that carry between them the right to receive at least 40% of any distribution of    
      • income
      • capital
      • net income of the partnership if the other entity is a partnership
       
    • if the other entity is a company, they own or have the right to acquire the ownership of interests in the company with at least 40% of the voting power in the company.

    Different rules apply for a discretionary trust.

    If you are working out if you have ownership by exempt entities treat references to 40% above as references to 50%.

    Find out more

    We can decide that your entity does not control another entity, where your control percentage is at least 40%, but less than 50%. See subsection 328-125(6)External Link of the ITAA 1997.

    For detailed information about the meaning of 'connected with' and 'control', see section 328-125External Link of the ITAA 1997.

    End of find out more

    Exempt entity

    Exempt entity means an entity that is exempt from income tax under the ITAA 1997, ITAA 1936 or any other Commonwealth law, or an untaxable Commonwealth entity. For example, an entity that is exempt from income tax under section 50-1External Link of the ITAA 1997 is an exempt entity.

    Feedstock input expenditure

    Feedstock input expenditure refers to the expenditure incurred in one or more income years in acquiring or producing goods, or materials transformed or processed during R&D activities in producing one or more tangible products.

    Feedstock outputs

    Feedstock outputs refers to the tangible products produced as a result of the R&D activities (through the transformation or processing of feedstock inputs).

    Feedstock revenue

    When the feedstock output is immediately supplied or applied, the feedstock revenue will be its market value at that point.

    If further expenditures are incurred on the feedstock output between the R&D activity and the point of supply, then the feedstock revenue will be a proportion of the value of the marketable product that is supplied. In these circumstances the feedstock revenue is calculated as follows:

    Market value of the marketable product

    X

     Cost of producing feedstock output 
    Cost of producing marketable product

    Indirect control

    If your entity directly controls a second entity, and the second entity controls (whether directly or indirectly) a third entity, then your entity is taken to control the third entity.

    Find out more

    There are some exceptions to this rule, see subsection 328-125(8)External Link of the ITAA 1997.

    End of find out more

    Abbreviations

    ABN

    Australian business number

    CRC

    cooperative research centre

    GST

    goods and services tax

    IR&D Act

    Industry Research and Development Act 1986

    ITAA 1936

    Income Tax Assessment Act 1936

    ITAA 1997

    Income Tax Assessment Act 1997

    R&D

    research and development

    RSP

    registered service provider

    TFN

    Tax file number

    Last modified: 07 Jul 2014QC 40277