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-J - Application to R&D partnerships  

SECTION 355-525   Balancing adjustments for R&D partnership assets only used for R&D activities  

355-525(1)  
This section applies to an *R&D entity (the partner ) if:


(a) a *balancing adjustment event happens in an income year (the event year ) for an asset *held by an *R&D partnership; and


(b) the R&D partnership cannot deduct an amount under section 40-25, as that section applies apart from:


(i) this Division; and

(ii) former section 73BC of the Income Tax Assessment Act 1936;
for the asset for an income year; and


(c) the partner is entitled under section 355-100 to *tax offsets for one or more income years for deductions (the R&D deductions ) under section 355-520 for the asset; and


(d) the partner is registered under section 27A of the Industry Research and Development Act 1986 for one or more *R&D activities for the event year; and


(e) if Division 40 applied with the changes described in section 355-310 (as affected by subsection 355-520(2)):


(i) the R&D partnership could deduct for the event year an amount under subsection 40-285(2) for the asset and the balancing adjustment event; or

(ii) an amount would be included in the R&D partnership's assessable income for the event year under subsection 40-285(1) for the asset and the balancing adjustment event.
Notional deduction

355-525(2)  
If the *R&D partnership could deduct for the event year an amount under subsection 40-285(2) for the asset and the event if Division 40 applied as described in paragraph (1)(e), the partner can deduct the partner's proportion of that amount for the event year. Amount to be included in assessable income

355-525(3)  
If an amount (the section 40-285 amount ) would be included in the *R&D partnership's assessable income for the event year under subsection 40-285(1) for the asset and the event if Division 40 applied as described in paragraph (1)(e), the partner's proportion of the sum of:


(a) that amount; and


(b) the following amount;

is included in the partner's assessable income for the event year:


Adjusted section 40-285 amount × 1
3

where:

adjusted section 40-285 amount
means so much of the section 40-285 amount as does not exceed the total decline in value.

total decline in value
means the asset's *cost, less its *adjustable value, worked out under Division 40 as it applies as described in paragraph (1)(e).

Amount to be included in assessable income may be reduced if notional deductions exceeded $100 million

355-525(4)  


For the purposes of subsection (3), the partner may choose to reduce the adjusted section 40-285 amount in that subsection if:


(a) subsection 355-100(3) applied to the partner for an earlier income year or the event year (the excess year ); and


(b) the partner's deductions for the excess year included deductions covered by paragraph (1)(c) of this section for the asset.

355-525(5)  


Subsection 355-720(3) applies to the partner as if a reduction under subsection (2) of that section for the present year included a reduction under subsection (4) of this section for the event year.

355-525(6)  


The way the partner prepares its income tax returns is sufficient evidence of the making of a choice under subsection (4).

355-525(7)  


A choice under subsection (4) is irrevocable.

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