House of Representatives

Tax Laws Amendment (Research and Development) Bill 2010

Income Tax Rates Amendment (Research and Development) Bill 2010

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Wayne Swan MP)

Although ex ante preparation of an R & D Plan is not a statutory requirement for registration under the R & D tax incentive, documented planning will still form an appropriate part of evidencing a systematic progression of work.

The treatment of software that is developed as part of an R & D project is illustrated in Example 2.18.

Although Oulixeus incurs a $300,000 company tax liability in relation to the grant, it also receives a $400,000 tax offset (in lieu of a $1 million tax deduction) in relation to the grant-funded spending, of which $300,000 (30 per cent of $1 million) was the non-incentive component.

Strictly speaking, each ingot would be a separate feedstock output and related feedstock expenditure attributed to each ingot under standard accounting principles; but, where collectively the same feedstock expenditures would be attributed to the full set of ingots, the total feedstock adjustment would be the same as if the set of ingots were treated as a single feedstock output.

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