Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-45
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RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS
Division 355
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Research and Development
The *R & D entity has an amount under this section if: (a) it incurs expenditure in one or more income years in acquiring or producing goods, or materials, (the feedstock inputs ) transformed or processed during *R & D activities in producing one or more tangible products (the feedstock outputs ); and (b) it obtains under section 355-100 *tax offsets for one or more income years (each an offset year ) for deductions under this Division:
The amount is equal to the lesser of: (a) the *feedstock revenue for the feedstock output; and (b) so much of the total of the amounts deducted as described in paragraph (1)(b) as is reasonably attributable to the production of the feedstock output. 355-445(3)
Subsection (2) does not apply to the feedstock output if: (a) it becomes, or is transformed into, a feedstock input; or (b) that subsection already applies to the feedstock output because of the application of paragraph (1)(c) to:
The feedstock revenue , for the feedstock output, is worked out using the following formula:
(a) *supplied by the *R & D entity to the other entity; or
(b) first applied by the R & D entity to the R & D entity ' s own use, other than use for the purpose of transforming that product for supply. 355-445(5)
This section applies to a *supply or use of the marketable product by: (a) an entity *connected with the *R & D entity; or (b) an *affiliate of the R & D entity or an entity of which the R & D entity is an affiliate;
Subdivision 355-G
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Clawback of R
&
D recoupments, feedstock adjustments and balancing adjustments
Operative provisions
SECTION 355-445
Feedstock adjustments
355-445(1)
The *R & D entity has an amount under this section if: (a) it incurs expenditure in one or more income years in acquiring or producing goods, or materials, (the feedstock inputs ) transformed or processed during *R & D activities in producing one or more tangible products (the feedstock outputs ); and (b) it obtains under section 355-100 *tax offsets for one or more income years (each an offset year ) for deductions under this Division:
(i) for the expenditure; or
(ii) for expenditure it incurs on any energy input directly into the transformation or processing; or
(c) during the present year, a feedstock output, or a transformed feedstock output, (the marketable product ), is:
(iii) for the decline in value of assets used in acquiring or producing the feedstock inputs; and
(i) *supplied by the R & D entity to another entity; or
355-445(2)
(ii) applied by the R & D entity to the R & D entity ' s own use, other than use for the purpose of transforming that product for supply.
The amount is equal to the lesser of: (a) the *feedstock revenue for the feedstock output; and (b) so much of the total of the amounts deducted as described in paragraph (1)(b) as is reasonably attributable to the production of the feedstock output. 355-445(3)
Subsection (2) does not apply to the feedstock output if: (a) it becomes, or is transformed into, a feedstock input; or (b) that subsection already applies to the feedstock output because of the application of paragraph (1)(c) to:
(i) an earlier time during the present year; or
355-445(4)
(ii) an earlier income year.
The feedstock revenue , for the feedstock output, is worked out using the following formula:
Market value of the marketable product | × | Cost of producing the feedstock output |
Cost of producing the marketable product |
where:
market value of the marketable product
means the marketable product
'
s *market value at the time it is:
(a) *supplied by the *R & D entity to the other entity; or
(b) first applied by the R & D entity to the R & D entity ' s own use, other than use for the purpose of transforming that product for supply. 355-445(5)
This section applies to a *supply or use of the marketable product by: (a) an entity *connected with the *R & D entity; or (b) an *affiliate of the R & D entity or an entity of which the R & D entity is an affiliate;
as if it were by the R & D entity.
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