Plant and depreciating assets - post 29 January 2001 (decline in value)
(relevant to Australian owned R&D only)
Include at item 9 deductions for depreciating assets (section 73BB of the ITAA 1936), including certain capital works, used in carrying on Australian owned R&D activities. They must have begun to be constructed, or have been acquired under contracts entered into, after midday Australian Eastern Standard Time on 29 January 2001.
The amount allowable is determined through a notional application of the provisions of Division 40 of the ITAA 1997, subject to certain assumptions. These are set out in section 73BC of the ITAA 1936.
For an asset used for non-R&D purposes as well as for R&D purposes in a year, you can claim the R&D portion of the decline in value under section 73BA of the ITAA 1936. The remainder of the deduction is determined under Division 40 of the ITAA 1997.
If a taxpayer who could otherwise allocate an asset to a Division 40 low-value pool, or a general or long life small business pool uses that asset for research and development activities as its first use, the taxpayer must claim deductions for it under section 73BA of the ITAA 1936, not the general or long life small business pool (Subdivision 328-D of the ITAA 1997) nor the low-value pool provisions (Subdivision 40-E of the ITAA 1997). If the asset is used for non-R&D purposes for part of the year or in a subsequent year, deductions for that part of the year or the subsequent year will be considered under Division 40 of the ITAA 1997.
If an asset was not used for R&D in an earlier income year and the company was entitled to a deduction for the asset under a Division 40 low-value pool or a general or long life small business pool in that year, you should continue to calculate deductions under the relevant pooling provisions, even if the asset is subsequently used for R&D.
If your aggregate research and development amount is less than or equal to $20,000, you cannot claim the additional 25% deduction for this expenditure.
You may need to complete the Capital allowances schedule 2009. For more information, see Guide to depreciating assets 2009.
Note: You cannot claim a deduction under section 73BA of the ITAA 1936 for any period if, for any earlier period, the company was entitled to a deduction for the asset under the small business capital allowances provisions (Subdivision 328-D of the ITAA 1997) or a Division 40 low-value pool (section 40-440 of the ITAA 1997).
At H write the eligible notional Division 40 amount as determined under sections 73BA to 73BC of the ITAA 1936.
At I write the notional Division 40 amount as determined under sections 73BA to 73BC of the ITAA 1936 claimable at 100%, including where the aggregate research and development amount is less than $20,000.
At J write the notional Division 40 amount as determined under sections 73BA to 73BC of the ITAA 1936, claimable at 125%.
The total of the amounts at I and J must equal the base amount at H.
For more information, see:
- sections 73BA, 73BB and 73BC of the ITAA 1936
- Divisions 40 and 43 of the ITAA 1997
- Research and development tax concession.