Expenditure incurred on R&D activities
To claim the R&D tax incentive your total notional deductions must be greater than $20,000 (unless the expenditure is incurred to an RSP or is a monetary contribution to a CRC under the CRC program).
Subsection 355-205(1)External Link of the ITAA 1997 provides the legal basis for when notional deductions for R&D expenditure arise. It says:
An R&D entity can deduct for an income year (the present year) expenditure it incurs during that year to the extent that the expenditure:
(a) is incurred on one or more R&D activities:(i) for which the R&D entity is registered under section 27AExternal Link of the Industry Research and Development Act 1986 for an income year; and(ii) that are activities to which section 355-210External Link (conditions for R&D activities) applies; and
(b) if the expenditure is incurred to the R&D entity's associate - is paid to that associate during the present year.
Expenditure you incur in relation to subsection 355-205(1)External Link could therefore fall into these broad categories:
- contract expenditure you incur to an RSP
- expenditure you incur under contract to other parties
- salary expenditure for people employed by your company
- other R&D expenditure
- expenditure on overseas activities
- R&D expenditure paid to your associate in your claim year, unless already claimed under another provision in the year the amount was incurred.
In general, R&D expenditure consists of amounts incurred on core R&D activities and supporting R&D activities.
Find out more
For further information about core R&D activities and supporting R&D activities, see Eligible Activities on the AusIndustryExternal Link website.
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