Calculation instructions
If the company chooses to take the R&D tax offset, it means that the company has chosen to forgo an R&D tax concession deduction (refer subsection 73I(1) of ITAA 1936). The company cannot claim both.
The company can only choose to take the R&D tax offset on its return of income (which includes the R&D schedule).
The company must be registered with the IRDB before it makes its choice.
End of attentionThe company cannot choose to take the R&D tax offset if an exempt entity, the affiliates of an exempt entity, an exempt entity together with its affiliates, or two or more exempt entities legally or beneficially own, or have the right to acquire, the legal or beneficial ownership of interests in the company that carry between them the right to:
- exercise, or control the exercise of, at least 25% of the voting power of the company, or
- receive at least 25% of any distribution of income or capital by the company (refer subsection 73J(2) of ITAA 1936).
The Excel spreadsheet version of the Research and development tax concession schedule 2007 (the schedule) asks the question: 'Do you wish to check eligibility for the R&D tax offset?' Choose 'No' if the company is not eligible because of exempt entity ownership as referred to above.
End of further informationWhat to do if your answer is 'No'
If you choose 'No', you have completed the R&D schedule.
What to do if your answer is 'Yes'
If you choose 'Yes', the remaining instructions will assist you in determining the company's eligibility as well as any entitlement to the R&D tax offset.
- The schedule will automatically populate the company's name, TFN and aggregate R&D amount at row a.
- You must insert the company's turnover (calculated in accordance with section 73K of the ITAA 1936) at row a.
- Enter the company name, and the TFN of all entities that are required to be grouped under section 73L of ITAA 1936, at item 1 Research and development tax offset in Part E.
- Enter the amount of each entity's aggregate R&D amount, as defined in subsection 73B(1), and the turnover against the entity's tax file number in the columns Aggregate R&D amount and 'Entity turnover' respectively.
The aggregate R&D amount that is automatically populated for the company may not be correct unless you have properly followed instructions for Part B, item 6. (This requires building expenditure and other adjustments required to calculate the company's aggregate R&D amount to be included at Part B item 6). The aggregate R&D amount of each of the entities grouped with the company must also be calculated with reference to this instruction.
End of attention- Attach an additional schedule if there is insufficient space for all group members.
- Ensure that the aggregateR&D amounts and turnover from the additional schedule are summed and the totals placed in row g of the original schedule. If the total of the aggregate R&D amount column is $1,000,000 or less and the total of the R&D Group Turnover column is less than $5,000,000, the company is eligible to choose to claim the R&D tax offset (paragraphs 73J(1)(c) and (d) of ITAA 1936).
The group aggregate R&D amount and the group turnover are automatically totalled at label B and C respectively.
End of attention- The amount at Label Y is the company's entitlement to the R&D tax offset. Transfer this amount to Label Y R&D tax offset, if chosen at Item 7, on the Company tax return 2006. Transfer the amount calculated at Label U (30% of Label Y) to Label U - R&D tax offset in the Calculation Statement on the Company tax return 2007.
- If the company is eligible to make this choice, but does not wish to do so, change your answer to the question 'Do you wish to check eligibility for the R&D tax offset to 'No'. Ensure that Label Y R&D tax offset, at Item 7 of the Company tax return 2006 and Label U - R&D tax offset in the Calculation Statement on the Company tax return 2007 are not completed.
More information
For more information, see:
- sections 73H to 73M and 73B of ITAA 1936
- Guide to the R&D tax concession