Core technology expenditure
Expenditure incurred in acquiring technology that is 'core technology' is ineligible for the R&D tax incentive.
Further information about core technology, is available from R&D Tax Incentive: Core Technology on the AusIndustryExternal Link website.
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Undeducted core technology
There are transitional rules in place to ensure that core technology expenditure (within the meaning of former section 73BExternal Link of the Income Tax Assessment Act 1936) remaining after the last income year commencing before 1 July 2011 is eligible for deduction.
In most cases, the undeducted expenditure is deductible in equal proportions over five income years, starting in the first income year commencing on or after 1 July 2010. However, if the core technology is a depreciating asset, the depreciating asset provisions in Division 40External Link of the ITAA 1997 will apply on the basis that the opening adjustable amount is the amount of undeducted expenditure in relation to the asset.
Undeducted core technology expenditure is not included as a notional R&D deduction. It should be claimed at label X Other deductible expenses in item 7 of the Company Tax Return.
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