Calculation instructions
An eligible company cannot deduct any amount under section 73B (except subsection 73B(14C)), 73BA, 73BH or 73QA of the ITAA 1936 for the tax offset year, if it chooses the R&D tax offset for that year. The R&D tax offset does not apply to deductions under subsection 73B(14C) of the ITAA 1936 (deduction for expenditure on foreign owned R&D) and under section 73QB of the ITAA 1936 (extra deduction for increase in expenditure on foreign owned R&D).
The company can choose to take the R&D tax offset in its company tax return (which includes the research and development tax concession schedule), or by notice in writing to the Commissioner. See Guide to the R&D tax concession for information about the time periods for giving this notice.
The company must be registered with Innovation Australia before it makes its choice.
End of attentionThe company cannot choose to take the R&D tax offset if, at any time during the R&D tax offset year, 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 the ITAA 1936).
The Excel spreadsheet version of the Research and development tax concession schedule 2008 asks the question: 'Do you wish to claim 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 Research and development tax concession schedule 2008.
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 the ITAA 1936, at item 1 R&D tax offset - (eligible Australian owned expenditure only) in Part F.
- Enter the amount of each entity's aggregate R&D amount, as defined in subsection 73B(1) of the ITAA 1936, 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 1. (This requires building expenditure, consolidated group adjustments, expenditure on foreign owned R&D and other adjustments required to calculate the company's aggregate R&D amount to be included at Part B item 1). 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- Complete an additional schedule if there is insufficient space for all group members.
- Ensure that the aggregate R&D amounts and turnover from the additional schedule are summed and the totals placed in row e item 1 of Part F 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 the ITAA 1936).
The group aggregate R&D amount and the group turnover are automatically totalled at B and C respectively.
End of attention- The amount at Y is the company's entitlement to the R&D tax offset. Transfer this amount to Y- R&D tax offset, if chosen at Item 7, on the Company tax return 2008. Transfer the amount calculated at Label U (30% of Label Y) to U - R&D tax offset in the Calculation Statement on the Company tax return 2008.
- 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 claim the R&D tax offset?' to 'No'. Ensure that Y - R&D tax offset, if chosen, at Item 7 of the Company tax return 2008 and U - R&D tax offset in the Calculation Statement on the Company tax return 2008 are not completed.
More information
For more information, see:
- sections 73H to 73M and 73B of the ITAA 1936
- Guide to the R&D tax concession.