A clawback adjustment under Subdivision 355-G of the Income Tax Assessment Act 1997 (ITAA 1997) applies if, during an income year, all of the following apply:
- You either receive or are entitled to receive a recoupment from an Australian government agency or a state or territory body (other than under the Cooperative Research Centre (CRC) program).
- The recoupment is either a:
- reimbursement relating to expenditure incurred on certain activities
- grant requiring expenditure to either be or have been incurred on certain activities.
- You have claimed the R&D tax incentive in relation to the expenditure (or decline in value of notional deductions where the expenditure was for a depreciating asset used in those activities).
What clawback does
Clawback doesn't decrease the grant or offset you receive. Instead, it increases your assessable income by an amount for the notional deduction that an R&D entity received or is entitled to receive in relation to the recoupment. This is called a 'clawback adjustment'.
Where a clawback adjustment doesn't apply
A clawback adjustment doesn't apply to:
- cash flow boosts you receive, as it is not a recoupment of expenditure incurred on or in relation to certain activities.
- a JobKeeper payment you received for your paid employees, as the payment has already triggered the at-risk rule. The total expenditure you can claim as a notional deduction for your wage expenditure has already been reduced by its receipt on application of the at-risk rule.
- a JobKeeper payment you received based on business participation, as the payment is not a recoupment of expenditure incurred on or in relation to certain activities.
Also, recoupments you receive under the Cooperative Research Centre (CRC) program are exempt from the clawback adjustment.
For more information see:
- section 355-440 and section 355-450 of the ITAA 1997
- Subdivision 355-K of the ITAA 1997
- connected entities and affiliates
- Taxation Determination TD 2021/9 Income tax: JobKeeper payments received or expected as a result of research and development expenditure