Income Tax Assessment Act 1997
An *R & D entity can deduct for an income year (the present year ) expenditure it incurs during that year to the extent that the expenditure:
(a) is incurred on one or more *R & D activities:
(i) for which the R & D entity is registered under section 27A of the Industry Research and Development Act 1986 for an income year; and
(ii) that are activities to which section 355-210 (conditions for R & D activities) applies; and
(b) if the expenditure is incurred to the R & D entity's *associate - is paid to that associate during the present year.
If the matters in subparagraphs (a)(i) and (ii) are not satisfied until a later income year, the R & D entity will need to wait until then before it can deduct the expenditure for the present year.
The R & D activities will need to be conducted during the income year the R & D entity is registered for those activities (see sections 27A and 27J of the Industry Research and Development Act 1986 ).
The entity may also be able to deduct expenditure incurred to an associate in an earlier income year (see section 355-480 ).
Expenditure incurred in income years starting on or after 1 July 2011 may be deductible for activities registered for income years starting before 1 July 2011 (see section 355-200 of the Income Tax (Transitional Provisions) Act 1997 ).355-205(2)
This section has effect subject to section 355-225 (excluded expenditure), Subdivision 355-F (integrity rules) and subsection 355-580(3) (CRC contributions).