These instructions will help you complete the Research and development tax incentive schedule 2015, which in turn will help you complete the items for the research and development (R&D) tax offset at item 21 of the Company tax return 2015 (NAT 0656). For more information about the R&D tax incentive, you can go to Research and development tax incentive.
If you fill in the Research and development tax incentive schedule 2015 on your computer, the form will complete some calculations and fields for you.
An online calculator is also available to help you complete the Research and development tax incentive schedule 2015. You can print a copy of the schedule when you have finished using the calculator. This schedule will be accepted for lodgment with an original tax return or an amendment request.
What's new?
Notional deductions exceeding $100 million
The rate of the R&D tax offset is reduced to the company tax rate for that portion of an entity’s notional R&D deductions that exceeds $100 million for an income year. This change applies to assessments for income years starting on or after 1 July 2014 and before 1 July 2024.
Tax offset rates
The government announced in the 2014-15 Budget its intention to amend the law to reduce the R&D tax offset rates. This measure is expected to take effect from 1 July 2014. At the time of publishing, these changes had not become law. For more information, go to New legislation.
Who must complete a Research and development tax incentive schedule?
You must complete and lodge a Research and development incentive schedule 2015 if you make a claim at item 21 on your Company tax return 2015 for an R&D tax offset under the R&D tax incentive, that is, Division 355 of the Income Tax Assessment Act 1997 (ITAA 1997).
If you have a feedstock adjustment (additional assessable income) but are not claiming an R&D tax offset in this year of income, you do not need to complete the Research and development tax incentive schedule 2015. You will still need to work out your feedstock adjustment and include it at W item 21 and B item 7 on the Company tax return 2015. See Part B of these instructions for information about how you work out your feedstock adjustment.
Who can claim the R&D tax incentive?
You may be entitled to claim the R&D tax incentive in your Company tax return 2015 if you are an R&D entity that has registered its R&D activities with Innovation Australia through AusIndustry for 2014–15.
Only R&D entities can register R&D activities and claim the R&D tax offset. You are an eligible R&D entity if you are a corporation that is any of the following:
- incorporated under an Australian law
- incorporated under foreign law but an Australian resident for income tax purposes
- incorporated under foreign law, and both of the following apply
- the corporation is a resident of a country with which Australia has a comprehensive double tax agreement which includes a definition of 'permanent establishment', and
- the corporation carries on business in Australia through a permanent establishment as defined in the double tax agreement. It is then eligible to the extent that it carries on business through that permanent establishment.
You are not eligible for the R&D tax incentive if you are:
- an individual
- a corporate limited partnership
- an exempt entity (because your entire income is exempt from income tax).
Trusts are not generally eligible R&D entities. The exception is a body corporate in the capacity of trustee for a public trading trust.
See also
You must register before claiming
You must register before you make a claim for the R&D tax incentive on the company's tax return. You must lodge an application for registration of the activities with Innovation Australia within 10 months of the end of your income year. For example, if your income year ends on the 30 June, then you must register with Innovation Australia by 30 April of the following year.
Who are the R&D activities conducted for?
Generally, an R&D entity is only entitled to a tax offset if the R&D activities were conducted for one of the entities below:
- the R&D entity itself
- a foreign corporation that is
- connected with, or an affiliate of, the R&D entity (or the R&D entity is an affiliate of the foreign resident)
- a resident of a country with which Australia has a comprehensive double tax agreement.
R&D activities that are conducted for a foreign corporation must be conducted under a written agreement meeting certain conditions between the R&D entity and the foreign corporation.
Additionally, if the R&D entity is a foreign corporation carrying on business through a permanent establishment in Australia, it may be entitled to an R&D tax offset if the R&D activities are conducted for the foreign corporation (and not for the permanent establishment in Australia).
See also
- Research and development tax incentive – for whom are the R&D activities conducted?
- Research and development tax incentive – who can claim
Who administers the R&D tax incentive?
The R&D tax incentive is jointly administered by AusIndustry in the Department of Industry, and the Australian Taxation Office (ATO).
For information about how to register for the R&D tax incentive and about what R&D activities qualify for the incentive:
- go to ausindustry.gov.auExternal Link
- phone AusIndustry on 13 28 46.
For information about what amounts are eligible for the R&D tax incentive and how to claim:
- go to ato.gov.au/randdtaxincentive
- phone us on 13 28 66.
Before you complete the Research and development tax incentive schedule
Before you start to fill in the schedule, you will need to make certain calculations and complete certain parts of the Company tax return 2015.
Six labels on the Company tax return 2015 relate to the R&D tax incentive:
- at page 5 item 7 Reconciliation to taxable income or loss
- D Accounting expenditure in item 6 subject to R&D tax incentive
- at page 9 item 21 Research and development tax incentive
- A Non-refundable R&D tax offset
- B Non-refundable R&D tax offset carried forward from previous year
- C Non-refundable R&D tax offset to be utilised in current year
- D Non-refundable R&D tax offset to be carried forward to next year
- U Refundable R&D tax offset
- W Feedstock adjustment - additional assessable income
- at page 11 Calculation statement
- M R&D recoupment tax
See also
- Company tax return instructions 2015
- Preliminary calculation – Add-back of research and development (R&D) accounting expenditure)
Total notional R&D deduction amount
Using Part A of these instructions, calculate your total notional R&D deduction amount to determine whether the company can claim an R&D tax offset. To be eligible to claim an R&D tax offset, the company's total notional deductions at Part A must be at least $20,000. If your total notional deductions are less than $20,000, you will only be able to obtain the R&D tax offset for:
- expenditure incurred to a Research Service Provider (RSP) for services within a research field for which the RSP is registered under the Industry Research and Development Act 1986 (IR&D Act), when that RSP isn't an associate of the R&D entity
- expenditure incurred as a monetary contribution under the Cooperative Research Centre (CRC) program.
Note:
Do not complete a schedule unless any of the following apply:
- your total notional deductions are at least $20,000
- you have incurred expenditure to a RSP, or
- you have made a monetary contribution under the CRC program.
If you do not have to complete a schedule and you have a feedstock adjustment or clawback adjustment, you must record this on the company tax return:
- feedstock adjustment at W Feedstock adjustment – additional assessable income item 21 and B Other assessable income item 7
- clawback adjustment in the Calculation statement, label M, R&D recoupment tax.
Expenditure to associates
Under the R&D tax incentive, you can only obtain an R&D tax offset for expenditure incurred to an associate when that amount is paid. Before completing the Research and development tax incentive schedule, you will need to determine which amounts you have paid to associates; see Part D – R&D expenditure to associates.
See also
Consolidated groups
The amounts used in the calculation of the R&D tax incentive for consolidated groups must be worked out on a consolidated basis, with all intra-group transactions eliminated. They must not be calculated on an aggregated basis, by simply adding together the expenditure of each company in the group.
Only one Research and development tax incentive schedule is required for a consolidated group, to be completed by the head company.
Clawback adjustment
A clawback adjustment will apply if both of the following apply:
- you claimed a notional deduction under the R&D tax incentive
- you received, or have become entitled to receive, a government recoupment such as a grant or reimbursement that relates to this expenditure.
The government recoupment may be from an Australian Government agency or a state or territory body.
Under subdivision 355-G of the ITAA 1997, the income tax you are liable to pay on the recoupment will be increased. This is referred to as a clawback adjustment and is recorded at the Calculation statement, label M, R&D recoupment tax on the Company tax return 2015.
If a clawback adjustment applies, read Part C – Clawback – R&D recoupment tax.
See also
Prepayments
Adjust the amount of expenditure incurred in accordance with the prepayment provisions in sections 82KZL to 82KZMF of the Income Tax Assessment Act 1936 (ITAA 1936).
See also
Expenditure incurred while not at arm's length
If you incur expenditure to either an associate or another party with which you are not dealing at arm's length and the expenditure incurred exceeds the market value of the relevant R&D activity, the amount eligible for a notional R&D deduction is treated as being the market value of the R&D activity.
Intra-group markups
The amount that a company can claim as a notional R&D deduction is reduced to reflect mark-ups between connected or affiliated entities.
Before completing the schedule you need to calculate your reduction amount using the method statement in subsection 355-415(2) of the ITAA 1997.
Overseas expenditure
Companies wishing to claim a notional deduction for overseas R&D activities under Division 355 of the ITAA 1997 must have a positive overseas finding from Innovation Australia before they can make a claim. Sections 28C and 28D of the Industry Research and Development Act 1986 (IR&D Act) provide information on findings about activities to be conducted outside Australia, including conditions that must be met.
See also
For more information about the location of your R&D activities, go to ausindustry.gov.auExternal Link and search for:
- Research and development tax incentive – overview
- R&D tax incentive – overseas R&D.
Depreciating assets
Determine amounts that are notionally deductible for decline in value of depreciating assets under subdivision 355-E or section 355-520 of the ITAA 1997, in relation to your R&D activities.
See also
- Guide to depreciating assets 2015 (NAT 1996)
Entitlement requirements
To work out whether your company qualifies for the refundable or non-refundable tax offset, you need to consider whether it is an R&D entity that:
- meets the aggregated turnover threshold, or
- is controlled by one or more exempt entities.
‘Aggregated turnover’ is explained in Definitions.
Regardless of a company's aggregated turnover, if one or more exempt entities have direct control or indirect control of the company (with a relevant control threshold of 50%), then the company is only eligible for the 40% non-refundable tax offset.
See also
- Research and development tax incentive
- Research and development tax incentive – grouping for aggregated turnover purposes
- Calculate your aggregated turnover
Expenditure that is not at risk
As per section 355-405 of the ITAA 1997, a company cannot claim a notional deduction for expenditure if it is not at risk in respect of that expenditure. Apply section 355-405 of the ITAA 1997 to reduce your notional deductions by any amount for which the company was not at risk.
Core technology expenditure
Expenditure incurred in acquiring technology that is core technology cannot be claimed under the R&D tax incentive.
Companies in doubt as to whether their particular technology is core technology can request a finding from Innovation Australia. This finding gives companies certainty about whether expenditure incurred in acquiring the technology is excluded under the R&D Tax Incentive.
The law changed with effect from 1 July 2011. There are special transitional arrangements covering undeducted core technology expenditure which was previously deductible under the R&D tax concession.
These arrangements will help ensure that any undeducted core technology expenditure is eligible for deduction, even though such deductions are not taken into account in calculating the amount of any tax offset a company might be entitled to under the R&D tax incentive.
The rules outlined below apply irrespective of whether the company continues to use the core technology for eligible R&D activities after 1 July 2011.
If the core technology is a depreciating asset (for example, a patent) the provisions in Division 40 of the ITAA 1997, for deducting amounts for depreciating assets, will apply on the basis that the opening adjustable amount is the amount of undeducted expenditure in relation to the asset.
If the core technology is not a depreciating asset, the undeducted expenditure is deductible in equal proportions over five income years, starting in the first income year beginning on or after 1 July 2011.
Undeducted core technology amounts, claimed under the transitional rules, should be shown at X Other deductible expenses item 7 in the Company tax return 2015.
Building expenditure
Expenditure is ineligible to be notionally deducted under the R&D tax incentive if it is incurred to acquire or construct either:
- a building or a part of a building, or
- an extension, alteration or improvement to a building.
Interest expenditure
Expenditure incurred for interest (within the meaning of subsection 128A(1AB) of the ITAA 1936) payable to an entity is ineligible to be notionally deducted under the R&D tax incentive.
Goods and services tax (GST)
Adjust expenditure amounts to exclude any GST input tax credits to which you are entitled (see Division 27 of the ITAA 1997).
Lodging the schedule
For information on how to lodge your schedule, see Lodgment.
Complete all items that apply to your company, including yes or no items. If an item or label (other than a yes or no item) does not apply, leave it blank unless otherwise instructed.
Completing the Research and development tax incentive schedule
Filling in the top of page 1
Original or amended schedule
If the company has already lodged a Research and development tax incentive schedule for 2014–15, place an X in the box at the right of Amended schedule. If it hasn't, place an X in the box at the right of Original.
Company name
Enter the name of the company. The name shown on the Research and development tax incentive schedule must be the same as that shown on the company's tax return.
Tax file number (TFN)
Enter the TFN of the company lodging the schedule and company tax return. The TFN shown on the Research and development tax incentive schedule must be the same as that shown on the company's tax return.
AusIndustry – Innovation Australia number
Enter the AusIndustry – Innovation Australia registration number issued to the company for registered R&D activities for this income year. If you are only claiming expenditure incurred to an associate in an earlier income year that has been paid in the current year, you will need to include your AusIndustry – Innovation Australia registration number for the income year that registration was obtained for the related R&D activities. If your company is part of a consolidated group, only the head company should apply for registration under the R&D tax incentive.
Australian business number (ABN)
Enter the company's ABN.
Preliminary calculation – Add back of research and development (R&D) accounting expenditure
At D Preliminary calculation enter the total of amounts written at the expenditure labels in item 6 Calculation of total profit or loss on the Company tax return 2015 that relate to amounts that you are claiming as a notional R&D deduction under the R&D tax incentive provisions. Generally, these amounts include expenditure for accounting purposes on R&D activities, which are used in calculating the R&D tax offset, rather than being claimed as allowable deductions.
The Income and Expenses amounts written at item 6 Calculation of total profit or loss are accounting system amounts that correspond to the amounts in your financial statements for the income year. Do not include accounting fees here.
At D Preliminary calculation you also need to include amounts that you have written at the expenditure labels in item 6 Calculation of total profit or loss on the Company tax return 2015 which you have incurred to your associates that are not yet paid or claimed and are to be carried forward. For more information, see Part D – R&D expenditure to associates.
The amount written at D Preliminary calculation on the Research and development tax incentive schedule must be the same as the amount written at D Accounting expenditure in item 6 subject to R&D tax incentive item 7 on the Company tax return 2015.
If you have not written expense amounts for R&D deductions and R&D expenditure to associates to be carried forward at item 6 Calculation of total profit or loss on the company tax return (if, for example, those amounts are capitalised for accounting purposes) enter 0 (zero) at:
- D Preliminary calculation on the Research and development tax incentive schedule, and
- D Accounting expenditure in item 6 subject to R&D tax incentive item 7 on the Company tax return 2015.
Part A – Calculation of notional R&D deduction
Show the notional R&D deduction amounts at Part A in whole dollars only. Do not multiply the amounts in Part A by the offset percentage to which the company is entitled, this is done in Part E – R&D tax offset calculation.
In allocating notional R&D deduction amounts to the items 1 to 9 in Part A, choose the item most appropriate to the expenditure or decline in value amount in question.
Australian owned R&D column
Enter in this column all amounts that relate to R&D activities that the company has conducted for itself where it is a corporation that is:
- incorporated under an Australian law, or
- incorporated under foreign law but an Australian resident for income tax purposes.
Foreign owned R&D column
Enter in this column all amounts that your company (an R&D entity) incurs for another company that is:
- a foreign corporation, and
- a resident of a country with which Australia has a comprehensive double tax agreement.
The activities must be conducted under a written agreement between the entities.
Additionally, enter amounts in this column for amounts incurred if the R&D entity is a foreign corporation carrying on business through a permanent establishment in Australia that can be claimed under the R&D tax incentive.
If you are claiming amounts in this column, you will also need to consider other taxation implications in regard to your related-party international dealings. For more information, see International dealings schedule instructions and the taxation rulings referred to within that publication.
If an R&D entity is entitled under section 355-100 of the ITAA 1997 to an R&D tax offset for an income year for expenditure it can notionally deduct under sections 355-205, 355-480 or 355-580 of the ITAA 1997, that expenditure:
- cannot be taken into account by any entity in working out a deduction under any provision for any income year, and
- cannot be taken into account by any entity in working out another tax offset under any provision for any income year.
If an R&D entity is entitled under section 355-100 of the ITAA 1997 to an R&D tax offset for an income year for the decline in value under sections 355-305, 355-315, 355-520 or 355-525 of the ITAA 1997, that decline in value (to the extent that the asset is used for the purpose of conducting R&D activities):
- cannot be taken into account by any entity in working out a deduction under any other provision (other than section 40-292 or 40-293 of the ITAA 1997) for any income year, and
- cannot be taken into account by any entity in working out another tax offset under any other provision for any income year.
Do not include any amounts at Part A for building expenditure, interest expenditure, core technology expenditure, non-arm's length amounts, not-at-risk amounts, group markup amounts or expenditure incurred, but not paid, to associates.
Item 1 R&D expenditure – Research service provider (RSP)
Enter at item 1 R&D expenditure – Research service provider (RSP) the expenditure you have incurred to an RSP, to the extent that it has been incurred on R&D activities.
Apportion expenditure between R&D activities and other activities that the company undertakes and show expenditure on R&D activities only at this item.
Separate the expenditure at item 1 between Australian owned R&D activities (A) and foreign owned R&D activities (B).
In most circumstances, expenditure to an RSP is not subject to the $20,000 notional deduction threshold. You will therefore be able to claim an R&D tax offset for this expenditure, regardless of the amount. However, these rules will only apply where:
- the RSP is not an associate of the R&D entity
- the R&D activities are within a research field for which the RSP is registered under the IR&D Act.
See also
Item 2 R&D expenditure – Contract expenditure (not RSP)
Enter at item 2 R&D expenditure – Contract expenditure (not RSP) the amount of expenditure you have incurred under a contract to another party (other than an RSP), to the extent that it has been incurred on R&D activities.
Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this item.
Separate the expenditure at item 2 between Australian owned R&D activities (C) and foreign owned R&D activities (D).
Do not show any amounts at this item for expenditure incurred to an associate. If you have entered into a contract with your associate, you are only eligible to claim the amount incurred in the income year to the extent it is paid. Amounts paid to an associate are shown at Part A, item 6. You also need to provide further details of expenditure to your associates in Part D – R&D expenditure to associates.
You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.
See also
- Expenditure you incur under contract to other parties
- Research and development tax incentive – Keeping records and calculating your notional deductions
Item 3 R&D expenditure – Salary expenditure
Enter at item 3 R&D expenditure – Salary expenditure the amount of salary expenditure you have incurred for all of your employees, to the extent that it has been incurred on R&D activities.
The amounts shown at this item include expenditure on salary and wages (and associated on costs) of:
- managers or supervisors of research staff
- researchers
- technical employees
- supervisors of research staff conducting R&D activities.
Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this item.
Separate the expenditure at item 3 between Australian owned R&D activities (E) and foreign owned R&D activities (F).
Do not show any amounts at this item for expenditure incurred to an associate. If you incurred expenditure to your associate, you are only eligible to claim the amount incurred in the income year to the extent it is paid. Amounts paid to an associate are shown at Part A, item 6. You also need to provide further details of expenditure to your associates in Part D – R&D expenditure to associates.
You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.
See also
- Salary expenditure
- Research and development tax incentive: keeping records and calculating your notional deductions
Item 4 R&D expenditure – Other
Enter at item 4 R&D expenditure – Other the expenditure, to the extent that it has been incurred on R&D activities, that is not required to be shown at any other item of Part A. Types of expenditure to be shown at this item may include:
- administrative costs and overheads incurred on R&D activities
- expenditure on overseas activities that are covered by a finding made by Innovation Australia under section 28C of the IR&D Act.
Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this item.
Separate the expenditure at item 4 between Australian owned R&D activities (G) and foreign owned R&D activities (H).
Do not show any amounts at this item for expenditure incurred to an associate. If you incurred expenditure to your associate, you are only eligible to claim the amount incurred in the income year to the extent it is paid. Amounts paid to an associate are shown at Part A item 6. You also need to provide further details of expenditure to your associates in Part D – R&D expenditure to associates.
You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.
See also
- Other R&D expenditure
- Research and development tax incentive – Keeping records and calculating your notional deductions
Item 5 R&D expenditure – Feedstock input expenditure
Enter at item 5 R&D expenditure – Feedstock input expenditure the total amount of expenditure incurred in the income year on acquiring or producing feedstock inputs that are transformed or processed during R&D activities in producing one or more tangible products (feedstock outputs).
Feedstock input expenditure also includes:
- the total cost of energy input directly into the transformation or processing, and
- the decline in value of assets used in acquiring or producing the feedstock inputs to these R&D activities.
Separate your expenditure at item 5 between Australian owned R&D activities (I) and foreign owned R&D activities (J).
You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.
An amount included in Feedstock input expenditure must not also be included at any other label in Part A.
The amount to be shown at this item may not form part of any feedstock adjustment in the 2014–15 year. However, it will represent expenditure on feedstock inputs and should be recorded separately from the other expenditure types in Part A. It may be expenditure to be taken into account in calculating the amount of a feedstock adjustment in the current or a future year (see Part B – Feedstock).
See also
Item 6 R&D expenditure – Paid to associates in the current year
Enter at item 6 R&D expenditure – Paid to associates in the current year the total amount of expenditure you have paid to your associates in 2014–15, to the extent that it has been incurred on R&D activities. You could include expenditure you have paid to associates in the current year that was either:
- incurred in 2014–2015
- incurred in earlier income years commencing on or after 1 July 2011
provided you have not claimed this expenditure under other provisions of the ITAA 1936 or ITAA 1997.
Apportion the company's expenditure between R&D activities and other activities that the company undertakes. Show expenditure on R&D activities only at this item.
Transfer this amount to Part D label E4 R&D expenditure paid to associates in the current year.
Separate the expenditure at item 6 between Australian owned R&D activities (K) and foreign owned R&D activities (L).
You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000.
If you have incurred expenditure to your associate, but it is not paid in 2014–15, do not include that amount at K or L item 6. For more information about how you treat this expenditure that is incurred but not yet paid, see Preliminary Calculation – Add back of research and development (R&D) accounting expenditure and Part D – R&D expenditure to associates.
See also
- Part D – R&D expenditure to associates
- Research and development tax incentive – expenditure incurred to an associate
- R&D expenditure paid to your associate in your claim year
- Research and development tax incentive – Keeping records and calculating your notional deductions
Item 7 R&D assets – Decline in value
Enter at item 7 R&D assets – Decline in value the decline in value amount notionally deductible under subdivision 355-E and section 355-520 of the ITAA 1997 for depreciating assets used in R&D activities.
Separate your decline in value amount at item 7 between Australian owned R&D activities (M) and foreign owned R&D activities (N).
You cannot claim these amounts on R&D activities unless your total notional deduction amount is at least $20,000.
See also
Item 8 R&D assets – Balancing adjustment losses
Enter at item 8 R&D assets – Balancing adjustment losses the amount of balancing adjustment losses you are eligible to notionally deduct under sections 35 5-315 or 355-525 of the ITAA 1997, for assets used only for R&D activities.
Separate the amount shown at item 8 between Australian owned R&D activities (O) and foreign owned R&D activities (P).
You cannot claim these amounts on R&D activities unless your total notional deduction amount is at least $20,000.
Balancing adjustment losses for assets used for both R&D and non-R&D activities are deductible under sections 40-285, 40-292 or 40-293 of the ITAA 1997 and do not qualify as notional deductions for the purposes of claiming an R&D tax offset.
Show at X Other deductible expenses item 7 on page 6 of the Company tax return 2015 your deduction for balancing adjustment losses if the assets have been used for both R&D and non-R&D activities.
If the company is otherwise eligible for an R&D tax offset under section 355-100 of the ITAA 1997 in the current year, the amount shown at X Other deductible expenses is calculated and claimed at an uplifted percentage (equivalent to the benefit you would have obtained as the R&D tax offset to which you are entitled) under sections 40-292 or 40-293 of the ITAA 1997.
If the company is not otherwise eligible for an R&D tax offset under section 355-100 of the ITAA 1997, the balancing adjustment losses for assets used on both R&D and non-R&D activities, as calculated under section 40-285 of the ITAA 1997, are included at X Other deductible expenses item 7 of the Company tax return 2015. This amount is not eligible to be uplifted and is therefore claimed at 100%.
Assessable balancing adjustment amounts (as a result of balancing adjustment profits) for assets used in R&D activities are included at B Other assessable income item 7 on page 5 of the Company tax return 2015.
If the asset has only been used for R&D activities, the assessable amount to be included at this label is uplifted by one third (as per subsection 355-315(3) of the ITAA 1997).
If the asset has been used partly for R&D activities, under subsection 40-292(5) or 40-293(3) of the ITAA 1997, the amount included and uplifted by one third is the proportion of the assessable balancing adjustment amount that relates to notional deductions claimed under the R&D tax incentive.
See also
Item 9 Cooperative Research Centre (CRC) contributions
Enter at item 9 Cooperative Research Centre (CRC) contributions the amount of expenditure you have incurred as a monetary contribution under the CRC program that is spent on registered R&D activities. Separate the incurred expenditure at item 9 between Australian owned R&D activities (Q) and foreign owned R&D activities (R).
Expenditure you incur as a monetary contribution under the CRC program is not subject to the $20,000 notional deduction threshold. You will therefore be able to claim an R&D tax offset for this expenditure, regardless of the amount.
See also
Item 10 Total of allocated notional deductions
Enter at X item 10 Total of allocated notional deductions the sum of the amounts shown at items 1 to 9 in the Australian owned R&D column.
Enter at Y item 10 Total of allocated notional deductions the sum of the amounts shown at items 1 to 9 in the Foreign owned R&D column.
Note: If you complete the form on your computer, item 10 will be calculated for you.
Item 11 Total notional R&D deduction (X plus Y)
Enter at Z item 11 Total notional R&D deductions (X plus Y) the sum of the amounts shown at X and Y in item 10 Total of allocated notional deductions.
If the amount shown at Z is less than $20,000, you will only be able to claim an R&D tax offset for amounts shown at:
- item 1 R&D expenditure – Research service provider (RSP)
- item 9 Cooperative Research Centre (CRC) contributions.
Note: If you complete the form on your computer, Z will be calculated for you.
Part B – Feedstock
A feedstock adjustment is an amount you include in your assessable income. It applies when you obtain an R&D tax incentive offset for your feedstock expenditure incurred on R&D activities, when those activities also produce tangible products for supply to someone else, or to be applied to the R&D entity's own use (other than in transforming such products for supply).
The feedstock adjustment applies to expenditure on the following:
- goods or materials (feedstock inputs) transformed or processed during R&D activities in producing one or more tangible products (feedstock outputs)
- energy that is input directly into that transformation or processing.
A feedstock adjustment may also apply in respect of amounts claimed for the decline in value of assets used in acquiring or producing feedstock inputs.
The feedstock provisions apply to both core R&D activities and supporting R&D activities that transform or process feedstock inputs. The provisions are not confined to mass production activities.
When a feedstock adjustment is triggered, you must include an amount in your assessable income. This may be in the current or in a future income year, depending on when the output is supplied or applied.
You do not need to complete Part B unless your R&D activities have produced a marketable product supplied to someone else, or applied to your own use during 2014–15 (other than in transforming such a product for supply). If your R&D activities have not produced a marketable product supplied to someone else or applied to your own use, go to Part C – Clawback – R&D recoupment tax in these instructions.
If you have a feedstock adjustment (additional assessable income) in 2014–15 but are not claiming the R&D tax offset, you do not need to complete the Research and development tax incentive schedule 2015. You will still need to work out your feedstock adjustment and include it at W item 21 and B item 7 of the Company tax return 2015. These instructions provide details about how you work out your feedstock adjustment.
See also
Item 1 Feedstock revenue total
Enter at item 1 Feedstock revenue total the total amount of feedstock revenue from all R&D activities, where those activities have produced products supplied to someone else, or applied to the R&D entity's own use (other than in transforming such products for supply).
Item 2 Expenditure on feedstock inputs attributable to feedstock output
Enter at item 2 Expenditure on feedstock inputs attributable to feedstock output the total amount of feedstock inputs attributable to feedstock outputs on all R&D activities, if those activities have produced products supplied to someone else, or applied to the R&D entity's own use (other than in transforming such products for supply).
Also include in the total amount written at item 2 Expenditure on feedstock inputs attributable to feedstock output the total amount of energy input directly into the transformation or processing and the decline in value of assets used in acquiring or producing the inputs to the R&D activities.
If you must include an additional amount in your assessable income as a result of triggering a feedstock adjustment, you may choose to reduce the amount of feedstock input expenditure in item 2 Expenditure on feedstock inputs attributable to feedstock output to calculate the additional assessable income for the feedstock adjustment in a particular income year if:
- the total R&D notional deductions in the income year in which the relevant R&D expenditure arose exceeds $100 million, and
- the sum of the proposed reduction and any prior reductions under these rules for that income year is not greater than the amount by which your R&D expenditure exceeded $100 million (for example, if total R&D expenditure is $150 million, then you may reduce additional liabilities by no more than $50 million).
Item 3 Feedstock adjustment – additional assessable income
The amount to be shown at B Feedstock adjustment – additional assessable income is the total of all feedstock adjustments that are required to be made for all R&D activities, if those activities have produced products supplied to someone else, or applied to the R&D entity's own use (other than in transforming such products for supply).
Step 1
Determine which R&D activities have produced marketable products.
Step 2
For each of the R&D activities identified at step 1 above, work out each of the following amounts:
- 2A – feedstock revenue
- 2B – the sum of amounts claimed (in the current income year or an earlier income year) as notional deductions for:
- feedstock inputs attributable to feedstock outputs from each of these R&D activities
- energy input directly into the transformation or processing
- the decline in value of assets used in acquiring or producing the feedstock inputs to these R&D activities.
Where you have total notional R&D deductions that exceed $100m, the amount used for the purposes of 2B may be reduced. The amount of the reduction when combined with reductions under the clawback and balancing adjustment rules cannot exceed the excess of notional R&D deductions over $100m.
Step 3
For each of the R&D activities identified at step 1 above, determine whether the amount calculated at step 2A is less than the amount calculated at step 2B, as the feedstock adjustment amount will be calculated as one third of the lesser amount.
Step 4
For each of the R&D activities identified at step 1 above, work out your feedstock adjustment amount as follows:
- If the amount calculated at step 2A is less than the amount calculated at step 2B, divide the amount shown at step 2A by 3.
- If the amount calculated at step 2B is less than the amount calculated at step 2A, divide the amount shown at step 2B by 3.
Step 5
Add together each of the amounts calculated at step 4 above. Enter the total at B item 3 Feedstock adjustment – additional assessable income.
If you complete the form on your computer, this will be calculated for you at B item 3. If you have multiple feedstock outputs, the additional assessable income may be too high. If this happens, click the box below label B (‘Check this box to overwrite the value at label B above. Uncheck to use calculation.’) and enter the correct value.
Note: Include this amount in the Company tax return 2015 at W Feedstock adjustment - additional assessable income item 21 and B Other assessable income item 7.
Part C – Clawback – R&D recoupment tax
If you are eligible for the R&D tax incentive and you receive a government recoupment (such as a government grant or reimbursement) that relates to expenditure that is eligible for the R&D tax incentive, clawback applies.
Clawback does not decrease the grant or offset you receive; rather it increases the income tax you are liable to pay. This income tax increase is called a 'clawback adjustment' or 'R&D recoupment tax'.
A clawback adjustment arises where during an income year you either receive or are entitled to receive a recoupment from an Australian government agency, or a state or territory body, and the following applies:
- the recoupment (such as a reimbursement) relates to expenditure incurred on certain activities or the recoupment (such as a grant) requires expenditure to either be or have been incurred on certain activities
- you are eligible for the R&D tax incentive for that expenditure (or decline in value notional deductions where the expenditure was for a depreciating asset used in those activities).
Only complete this item if you have received a government recoupment during 2014-15 that relates to an amount you have notionally deducted at Part A Calculation of notional R&D deduction on the Research and development tax incentive schedule in the current income year or in earlier income years commencing on or after 1 July 2011.
When you are subject to additional income tax as a result of clawback, you may choose to reduce the amount of expenditure in Item 2 R&D expenditure related to recoupments to calculate the additional income tax for the clawback adjustment in a particular income year if:
- the total R&D notional deductions in the income year in which the relevant R&D expenditure arose exceeds $100 million, and
- the sum of the proposed reduction and any prior reductions under these rules for that income year is not greater than the amount by which your R&D expenditure exceeded $100 million (for example, if total R&D expenditure is $150 million, then you may reduce additional liabilities by no more than $50 million).
If you are unable to claim the R&D tax incentive for expenditure related to the recoupment because section 355-405 of the ITAA 1997 applies (the expenditure is not at risk), you do not need to make a clawback adjustment. If section 355-405 does not apply to expenditure related to the recoupment, you may still need to make a clawback adjustment.
See also
Item 1 Recoupments – (entitled to/received)
Enter at item 1 Recoupments – (entitled to/received) the total amount of recoupment you have received, or become entitled to receive, (other than under the CRC program) in the current income year, that relate to notional R&D deductions for which you have claimed an R&D tax offset in the current income year or in earlier income years commencing on or after 1 July 2011.
Item 2 R&D expenditure related to recoupments
Enter at item 2 R&D expenditure related to recoupments the total amount claimed as a notional deduction under the R&D tax incentive that relates to the recoupment shown at item 1 Recoupments – (entitled to/received). This may include amounts claimed as a notional deduction in the current income year or in earlier income years commencing on or after 1 July 2011. Do not include R&D expenditure that you have already taken into account to work out another clawback adjustment (extra income tax) for another recoupment.
Where you have total notional R&D deductions that exceed $100m, the amount used for the purposes of item 2 may be reduced. The amount of the reduction when combined with reductions under the feedstock and balancing adjustment rules cannot exceed the excess of notional R&D deductions over $100m.
Item 3 Project expenditure for which recoupments paid
Enter at item 3 Project expenditure for which recoupments paid the total project expenditure for all years of the project for which the recoupment has been paid (including R&D and other amounts). You will need to consider the terms of the grant agreement to work out what your project expenditure is in respect of each recoupment. A recoupment may be an instalment under the agreement.
Where you have total notional R&D deductions that exceed $100m the amount used for the purposes of Item 3 may be reduced. The amount of the reduction when combined with reductions under the feedstock and balancing adjustment rules cannot exceed the excess of notional R&D deductions over $100m.
When you notionally deduct further amounts related to this recoupment under the R&D tax incentive in future years, you will be required to amend your Company tax return 2015 in the Calculation statement at M, R&D recoupment tax to include a further amount of R&D recoupment tax. Further amendments will be required until either:
- there is no more expenditure related to this recoupment, or
- the amount of the extra tax recouped at M, R&D recoupment tax in the Calculation statement becomes equal to the amount of the government recoupment received.
Item 4 R&D recoupment tax – 10% tax payable
Enter at M item 4 R&D recoupment tax – 10% tax payable the extra tax required on your recoupment as calculated under Subdivision 355-G of the ITAA 1997.
If you have claimed the R&D tax incentive at item 21 and you have received a government recoupment (such as a government grant or reimbursement) that relates to expenditure that you have claimed a notional deduction for under the R&D tax incentive, the income tax you are liable to pay on the recoupment will be increased. This is referred to as a clawback adjustment.
The clawback adjustment for each project is capped for grants, so that the extra tax payable cannot exceed the amount of the grant, that on a pro rata basis, you received for that project. As a result, if the sum calculated for M for each project exceeds the amount of the grant received for that project (which relates to the R&D expenditure), the amount to be shown at M for that project will be the amount of the grant.
Part D – R&D expenditure to associates
Under the R&D tax incentive, you can only obtain an R&D tax offset for expenditure incurred to an associate when that amount is paid. If you do not pay the amount until a later income year, you can choose to do either of the following:
- claim a deduction under the normal income tax provisions, for example, the general deduction provision, section 8-1 of the ITAA 1997, for the income year in which the amount was incurred.
- claim a notional R&D deduction in the year you make the payment.
This choice must be made by the time the R&D entity lodges its income tax return for the most recent income year before the income year in which the payment is made.
If you claim a deduction for this expenditure under the first choice you will no longer be entitled to claim a notional R&D deduction for that deducted expenditure in the year you make the payment. This cannot be reversed, for example, you cannot later request an amendment of the assessment to disallow the deduction you previously claimed. In addition to claiming this amount as a deduction in the Company tax return 2015, you will also need to record this expenditure that you have claimed under other income tax provisions in Part D item 3.
If you wish to claim the expenditure under the second choice, you will need to record an amount of R&D expenditure incurred to associates to be carried forward in Part D item 5. Also, if you have included the amount of R&D expenditure incurred to associates to be carried forward in item 6 Calculation of total profit or loss of the Company tax return 2015, you will need to add this amount back at D Preliminary calculation to ensure you do not also claim this amount as a deduction under the normal income tax provisions.
See also
Item 1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward)
Enter at E1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward) the total amount of R&D expenditure you have incurred to your associates in earlier income years commencing on or after 1 July 2011 that has not yet been paid or claimed. This amount is carried forward from earlier income years.
Item 2 Current year R&D expenditure incurred to associates
Enter at E2 the total amount of R&D expenditure you have incurred to your associates in 2014–15, including amounts that have not yet been paid.
Item 3 Current year R&D expenditure incurred to associates claimed under other provisions
Enter at E3 Current year R&D expenditure incurred to associates claimed under other provisions the total amount of R&D expenditure you have incurred to your associates in 2014–15, but claimed under other provisions of the ITAA 1936 or ITAA 1997 because the amount was not paid in 2014–15.
Note: If you claim a deduction for this expenditure under another provision of the ITAA 1936 or ITAA 1997, you will no longer be entitled to claim a notional R&D deduction in the year you make the payment. This choice cannot be reversed, for example, you cannot later request an amendment of the assessment to disallow the deduction you claimed.
If you choose to claim your associate expenditure under another provision of the ITAA 1936 or ITAA 1997, you need to ensure that you do not add this expenditure back at D Preliminary calculation on the Research and development tax incentive schedule or D Accounting expenditure in item 6 subject to R&D tax incentive item 7 on the Company tax return 2015. Expenditure to your associate claimed under another provision of the ITAA 1936 or ITAA 1997 should be treated the same as other expenditure claimed under that provision within the Company tax return 2015.
Item 4 R&D expenditure paid to associates in the current year
Enter at E4 R&D expenditure paid to associates in the current year the total amount of R&D expenditure you have paid to your associates in 2014–15. This could include amounts you have incurred and paid in 2014–15, or amounts you have incurred in earlier income years commencing on or after 1 July 2011, that have been paid in 2014–15 and that you have not previously claimed as a deduction under other provisions of the ITAA 1997 or ITAA 1936. The amount at E4 should be equal to the amount you have shown at Part A item 6 R&D expenditure – Paid to associates in the current year.
Item 5 R&D expenditure incurred to associates to be carried forward
If you have incurred expenditure to an associate during 2014–15 or in earlier income years commencing on or after 1 July 2011, you will be entitled to carry the amount forward and claim it as a notional R&D deduction in the year you make the payment to your associate if you have not either:
- paid the amount, or
- claimed it under another provision of the ITAA 1936 or ITAA 1997.
Calculate the amount to be shown at E R&D expenditure incurred to associates to be carried forward using Worksheet 1 below. If you complete the form on your computer, this will be calculated for you.
Worksheet 1 |
||
---|---|---|
R&D expenditure incurred to associates in prior years (not paid, not claimed) |
E1 |
$ |
Plus current year R&D expenditure incurred |
E2 |
$ |
Less amount claimed under other provisions |
E3 |
$ |
Less amount paid and claimed in current year |
E4 |
$ |
E1 + E2 – E3 – E4 = E Expenditure to associates to be carried forward |
E |
$ |
Enter the result from E on Worksheet 1 above at Part D, item 5, label E, R&D expenditure incurred to associates to be carried forward. If you complete the form on your computer, it will be calculated for you.
If you have already included this expenditure incurred to associates to be carried forward in item 6 Calculation of total profit or loss on the Company tax return 2015, also include this amount at D Preliminary calculation.
Part E – R&D tax offset calculation
The R&D tax incentive provides a targeted tax offset to encourage certain companies (R&D entities) to conduct R&D activities that benefit Australia and has the following core components:
- a 45% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million, unless they are controlled by one or more tax exempt entities
- a 40% non-refundable tax offset for all other eligible entities.
If an entity’s notional R&D deductions exceed $100 million for an income year, the rate of the R&D tax offset is reduced to the company tax rate for that portion exceeding $100 million. This change applies to assessments for income years starting on or after 1 July 2014 and before 1 July 2024.
Part E of these instructions will assist you in working out which offset you are entitled to and the amount of R&D tax offset you will be able to claim at item 21 of the Company tax return 2015.
See also
- Research and development tax incentive – refundable and non-refundable tax offsets
- Research and development tax incentive – grouping for aggregated turnover purposes
- Eligibility
- Research and development tax incentive
Item 1 Exempt entity ownership
Regardless of a company's aggregated turnover, if one or more exempt entities have direct control or indirect control of the company (with a relevant control threshold of 50%), then the company is eligible for the 40% non-refundable tax offset only.
If your company is controlled by one or more income tax-exempt entities, place an X in the box at the right of Yes and go to Part E item 5 Non-refundable tax offset. You do not need to complete items 2, 3 and 4.
If your company is not controlled by one or more income tax exempt entities, place an X in the box at the right of No and go to item 2.
Item 2 Aggregated turnover
If a company's aggregated turnover is $20 million or greater, the company is eligible for the 40% non-refundable tax offset.
If your company has an aggregated turnover of $20 million or greater, place an X in the box at the right of Yes and go to Part E item 5 Non-refundable tax offset. You do not need to complete items 3 and 4.
If your company has an aggregated turnover of less than $20 million, place an X in the box at the right of No. You must complete items 3 and 4 of Part E. You do not need to complete item 5.
Item 3 Aggregated turnover less than $20 million
At Part E item 2, if you have placed an X in the box at the right of No, you must complete item 3 and show details for your company and all entities connected with your company, or that are affiliates of yours, during 2014–15.
Enter your company name and tax file number (at a item 3), and (if any) the names and tax file numbers of all entities that are connected with, or are affiliates of, your company at any time during the year in Part E item 3.
Attach an additional table if you are connected or affiliated with more than three other entities.
In the column Annual turnover, enter the amount of each entity's annual turnover, as defined in section 328-120 of the ITAA 1997.
If you have used an additional table, add up the annual turnovers for each of the entities listed on the additional table and include the sum of these amounts at row e.
To correctly calculate aggregated turnover, you will need to make an adjustment if any amounts shown in the Annual turnover column relate to:
- ordinary income amounts derived from dealings between yourself and any entities you have listed in item 3
- ordinary income amounts derived from dealings between two or more other entities you have listed in item 3
- ordinary income amounts derived by entities you have listed in item 3 while they were not connected with you and were not your affiliates.
At row f, enter the total amount included in the Annual turnover column which requires an adjustment due to the points described above.
Calculate the amount to be shown at AT Aggregated turnover using Worksheet 2 below. If you complete the form on your computer, this will be calculated for you.
Worksheet 2 |
||
---|---|---|
Your company turnover |
a |
$ |
Connected/affiliated entity turnover |
b |
$ |
Connected/affiliated entity turnover |
c |
$ |
Connected/affiliated entity turnover |
d |
$ |
Connected/affiliated entity turnover total from additional table |
e |
$ |
Adjustments required as a result of exclusions from aggregated turnover |
f |
$ |
Aggregated turnover (a+b+c+d+e-f) |
AT |
$ |
Item 4 Refundable tax offset
If you answered no to items 1 and 2 of Part E and your notional deductions calculated under Part A label Z total $20,000 or more, you can claim the refundable tax offset. If your notional deductions calculated under Part A label Z total less than $20,000, then you are only entitled to a tax offset for notional deductions in relation to expenditure under Part A, A and B, R&D expenditure – Research service provider (RSP) and Part A, Q and R, Cooperative Research Centre (CRC) contributions.
Enter at Z1 Total notional R&D deductions the amount shown at Z of Part A, item 11. Enter at U Refundable R&D tax offset the amount calculated by multiplying the amount shown at Z1 Total notional R&D deductions by 45%.
However, if Z1 is greater than $100m you will need to calculate the amount at U Refundable R&D tax offset as:
- 45% multiplied by $100m, plus
- the corporate tax rate multiplied by the portion of the amount shown at Z1 Total notional R&D deductions which exceeds $100m.
For example, if an entity was entitled to a refundable 45% R&D tax offset and had $150m of R&D notional deductions, it would be entitled to an offset calculated as follows:
$100m x 45% = $45,000,000
$50m x 30% = $15,000,000
Total offset = $60,000,000
If you complete the form on your computer, this will be calculated for you.
Transfer the amount at U to the Company tax return 2015, U Refundable R&D tax offset item 21.
You do not need to complete item 5.
Item 5 Non-refundable tax offset
If you answered yes to item 1 or item 2 of Part E and your notional deductions calculated under Part A label Z total $20,000 or more, you can claim the non-refundable tax offset.
If your notional deductions calculated under Part A label Z total less than $20,000, then you are only entitled to a tax offset for notional deductions for expenditure under Part A, A and B, R&D expenditure – Research service provider (RSP) and Part A, Q and R, Cooperative Research Centre (CRC) contributions.
Enter at Z2 Total notional R&D deductions the amount shown at Z of Part A, item 11. Enter at A Non-refundable R&D tax offset the amount calculated by multiplying the amount you have shown at Z2 Total notional R&D deductions by 40%.
However, if Z2 is greater than $100m you will need to calculate the amount at A Non-refundable R&D tax offset as:
- 40% multiplied by $100m, plus
- the corporate tax rate multiplied by the portion of the amount shown at Z2 Total notional R&D deductions which exceeds $100m.
For example, if an entity was entitled to a non-refundable 40% R&D tax offset and had $150m of R&D notional deductions, it would be entitled to an offset calculated as follows:
$100m x 40% = $40,000,000
$50m x 30% = $15,000,000
Total offset = $55,000,000
If you complete the form on your computer, this will be calculated for you.
Transfer the amount at A to the Company tax return 2015, A Non-refundable R&D tax offset item 21.
Taxpayer's declaration
If you do not lodge the schedule with your tax return, you must sign and date page 4 of the schedule.
Definitions
Affiliate
An individual or company is an affiliate of your entity if, in relation to the affairs of their business, they act, or could reasonably be expected to act in either of the following ways:
- in accordance with your entity's directions or wishes
- in concert with your entity.
Two or more entities in partnership are not each other's affiliates just because one partner acts or could reasonably be expected to act in concert with the other in relation to the affairs of the partnership business.
See also
Aggregated turnover
Aggregated turnover is the sum of the annual turnover for all of the following:
- the R&D entity
- any entity connected with the R&D entity (within the meaning of section 328-125 of the ITAA 1997)
- any entity affiliated with the R&D entity (within the meaning of section 328-130 of the ITAA 1997).
Certain turnover amounts from dealings between these entities are excluded.
See also
- Research and development Tax incentive: calculate your aggregated turnover
- Section 328-115 of the ITAA 1997.
Annual turnover
An entity's annual turnover is the total ordinary income it derived in the income year in the ordinary course of carrying on its business activities. This amount does not include GST.
If an entity is not carrying on a business at any time during the income year, its annual turnover is nil. If your entity carries on business for part of the income year, its annual turnover for that year must be worked out using a reasonable estimate of what its annual turnover would be if it carried on a business for the whole income year.
See also
Associates
In broad terms, associates are those entities that, by reason of family or business connections, might appropriately be regarded as being associates of a particular entity.
Some examples of an associate of a company, other than a company in the capacity of trustee, include:
- a partner of the company or a partnership in which the company is a partner
- a trustee of a trust estate under which the company or associate benefits
- another entity (including a natural person) that, acting alone or with another entity or entities, sufficiently influences the company
- an entity (including a natural person) that, either alone or together with associates, holds a majority voting interest in the company
- a second company that is sufficiently influenced by the company or the company's associate
- a second company in which a majority voting interest is held by the company or the company's associate.
See also
- Section 318 of the ITAA 1936
Connected with an entity
Your entity is connected with another entity if either of the following applies:
- either entity controls the other entity
- both entities are controlled by the same third entity.
See also
- Section 328-125 of the ITAA 1997
Direct control
For the purposes of working out aggregated turnover, broadly, your entity controls another entity if either of the following applies to your entity, its affiliates or both:
- they own or have the right to acquire the ownership of interests in the other entity that carry between them the right to receive at least 40% of any distribution of
- income
- capital
- net income of the partnership if the other entity is a partnership
- if the other entity is a company, they own or have the right to acquire the ownership of interests in the company with at least 40% of the voting power in the company.
Different rules apply for a discretionary trust.
If you are working out whether you have ownership by exempt entities, treat references to 40% above as references to 50%.
We can decide that your entity does not control another entity, where your control percentage is at least 40%, but less than 50%.
See also
- Subsection 328-125(6) of the ITAA 1997
- Section 328-125 of the ITAA 1997
Exempt entity
Exempt entity means an entity that is exempt from income tax under the ITAA 1997, ITAA 1936 or any other Commonwealth law, or an untaxable Commonwealth entity. For example, an entity that is exempt from income tax under section 50-1 of the ITAA 1997 is an exempt entity.
Feedstock input expenditure
Feedstock input expenditure refers to the expenditure incurred in one or more income years in acquiring or producing goods, or materials transformed or processed during R&D activities in producing one or more tangible products.
Feedstock outputs
Feedstock outputs refers to the tangible products produced as a result of the R&D activities (through the transformation or processing of feedstock inputs).
Feedstock revenue
When the feedstock output is immediately supplied or applied, the feedstock revenue will be its market value at that point.
If further expenditures are incurred on the feedstock output between the R&D activity and the point of supply, then the feedstock revenue will be a proportion of the value of the marketable product that is supplied. In these circumstances the feedstock revenue is calculated as follows:
Market value of the marketable product |
X |
Cost of producing feedstock output |
Indirect control
If your entity directly controls a second entity, and the second entity controls (whether directly or indirectly) a third entity, then your entity is taken to control the third entity.
See also
- Subsection 328-125(8) of the ITAA 1997
Abbreviations
ABN |
Australian business number |
CRC |
cooperative research centre |
GST |
goods and services tax |
IR&D Act |
Industry Research and Development Act 1986 |
ITAA 1936 |
Income Tax Assessment Act 1936 |
ITAA 1997 |
Income Tax Assessment Act 1997 |
R&D |
research and development |
RSP |
registered service provider |
TFN |
Tax file number |