Item 6 Eligible feedstock expenditure

(relevant to Australian owned and foreign owned R&D)

Feedstock expenditure items

To find out how much to include at the feedstock expenditure items 6 and 14, first determine the following amounts.

• Feedstock expenditure - expenditure incurred in acquiring or producing materials or goods processed or transformed by the company in R&D activities. It includes expenditure on energy directly input into processing or transforming these materials or goods.
• Feedstock input - feedstock expenditure for materials or goods that were processed or transformed in R&D activities during the year of income.
• Feedstock output - the sales proceeds or value of any products obtained during the year of income from processing or transforming the materials or goods that were feedstock expenditure. It is either the amount received or receivable for the products sold in arm's length transactions or, if not sold, or not sold in an arm's length transaction, the amount that would have been received if they had been sold in an arm's length transaction.

Include at item 6 the amount of eligible feedstock expenditure as defined in subsections 73B(1) and 73B(1A) of the ITAA 1936 for related Australian owned or foreign owned R&D activities. It is the excess of the feedstock input over the feedstock output for the related activities, in the year of income. The eligible feedstock expenditure for Australian owned R&D can attract the additional 25% concession component.

You cannot claim this type of expenditure in respect of Australian owned R&D unless your aggregate R&D amount is greater than $20,000.

You cannot claim this type of expenditure in respect of foreign owned R&D unless your expenditure on foreign owned R&D is greater than $20,000.

For Australian owned R&D only, enter the remainder of feedstock input at item 14 as residual feedstock expenditure.

Adjust the amount of eligible feedstock expenditure claimed in accordance with the prepayment provisions (sections 82KZL to 82KZMF of the ITAA 1936).

This item excludes:

• other expenditure in respect of Australian owned R&D where your aggregate R&D amount is less than or equal to $20,000
• other expenditure in respect of foreign owned R&D where your expenditure on foreign owned R&D is less than or equal to $20,000.

At V enter the total amount of eligible feedstock expenditure (the base amount).

At W enter any amount of eligible feedstock expenditure on Australian owned R&D claimable at 100%.

At X enter any amount of the eligible feedstock expenditure on Australian owned R&D claimable at 125%.

At Z enter any amount of the eligible feedstock expenditure on foreign owned R&D.

More information

For more information, see:

• subsections 73B(1) and 73B(1A) of the ITAA 1936
• Guide to the R&D tax concession.