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Timing of the clawback adjustment

Last updated 8 February 2023

To work out in which income year you need to make a clawback adjustment, you must identify the ‘trigger year’.

Trigger year

The trigger year is the year that you either:

  • receive the recoupment that relates to R&D activities
  • are entitled to receive that recoupment if this occurs in an earlier income year.

Often, you will be entitled to receive a recoupment in the same income year that it is received. However, it is possible that you may be entitled to receive a recoupment in an income year earlier than the income year that you actually receive the recoupment. If this occurs, the year that you are entitled to receive the recoupment is the trigger year.

Instalments

If your recoupment is paid in instalments, over more than one income year, you may have more than one trigger year. You are required to make a clawback adjustment for each trigger year. Only R&D expenditure and total project expenditure that is required for the instalment is considered in working out the clawback adjustment for the trigger year.

Amending past tax assessments

The clawback adjustment on the recoupment is made in the trigger year, regardless of whether you claim the R&D tax offset in the same, an earlier or later income year. As a result, you may need to amend your past income tax assessments in some circumstances to make the clawback adjustment.

Example: more than one trigger year

Company E is a successful applicant for an Australian government agency grant. The grant is paid in 2 instalments, in advance of and for specified expenses being incurred by the company, provided certain milestones have been met by the payment date of the instalment. Company E receives the following grant instalments from the Australian government agency upon completion of the relevant milestones.

Grant instalments received

Instalment date

Instalment amount

1 June 2022 received during the income year ending 30 June 2022

$50,000

1 January 2023 received during the income year ending 30 June 2023

$80,000

The expenses were eligible R&D expenses, and were incurred and claimed by Company E under the R&D tax incentive in the income year ending 30 June 2023.

As Company E receives recoupments in 2 income years it has 2 trigger years, the income years ending 30 June 2022 and 30 June 2023.

However, as at 30 June 2022, Company E has not claimed the R&D tax offset for expenditure related to the grant instalment received on 1 June 2022. Therefore, Company E will lodge its 2022 company tax return without a clawback adjustment being made for that income year.

When Company E lodges its 2023 company tax return, it claims the R&D tax offset for the relevant expenditure that relates to both instalments of the grant and makes a clawback adjustment for the recoupment received on 1 January 2023. Company E also lodges an amendment to its 2022 company tax return to make a clawback adjustment for the recoupment received in the income year ending 30 June 2022.

End of example

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