Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 355 - Research and Development  

Subdivision 355-B - Meaning of R & D activities and other terms  

SECTION 355-25   Core R & D activities  

355-25(1)  
Core R & D activities are experimental activities:


(a) whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:


(i) is based on principles of established science; and

(ii) proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and


(b) that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).

355-25(2)  
However, none of the following activities are core R & D activities :


(a) market research, market testing or market development, or sales promotion (including consumer surveys);


(b) prospecting, exploring or drilling for minerals or *petroleum for the purposes of one or more of the following:


(i) discovering deposits;

(ii) determining more precisely the location of deposits;

(iii) determining the size or quality of deposits;


(c) management studies or efficiency surveys;


(d) research in social sciences, arts or humanities;


(e) commercial, legal and administrative aspects of patenting, licensing or other activities;


(f) activities associated with complying with statutory requirements or standards, including one or more of the following:


(i) maintaining national standards;

(ii) calibrating secondary standards;

(iii) routine testing and analysis of materials, components, products, processes, soils, atmospheres and other things;


(g) any activity related to the reproduction of a commercial product or process:


(i) by a physical examination of an existing system; or

(ii) from plans, blueprints, detailed specifications or publically available information;


(h) developing, modifying or customising computer software for the dominant purpose of use by any of the following entities for their internal administration (including the internal administration of their business functions):


(i) the entity (the developer ) for which the software is developed, modified or customised;

(ii) an entity *connected with the developer;

(iii) an *affiliate of the developer, or an entity of which the developer is an affiliate.

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