• 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.

    End of find out more
      Last modified: 25 Oct 2016QC 25805