Income Tax Assessment Act 1997



Division 355 - Research and Development  

Subdivision 355-G - Clawback of R & D recoupments, feedstock adjustments and balancing adjustments  

Operative provisions

SECTION 355-440   R & D recoupments  

The *R & D entity has an amount under this section if:

(a)    the entity, or another entity mentioned in subsection (5), receives or becomes entitled to receive a *recoupment from either of the following (otherwise than under the *CRC program):

(i) an *Australian government agency;

(ii) an STB (within the meaning of Division 1AB of Part III of the Income Tax Assessment Act 1936 ); and

(b)    the recoupment is received, or the entitlement to receive the recoupment arises, during the present year; and

(c)    either:

(i) the recoupment is of expenditure incurred on or in relation to certain activities; or

(ii) the recoupment requires expenditure (the project expenditure ) to have been incurred, or to be incurred, on certain activities.

Paragraph (c) includes expenditure incurred in purchasing a tangible depreciating asset to be used when conducting R & D activities.

The amount is equal to the sum of:

(a)    so much of the expenditure referred to in subsection (1) that is deducted under this Division; and

(b)    for each asset (if any) for which expenditure referred to in subsection (1) is included in the asset ' s *cost - each amount (if any) equal to the asset ' s decline in value that is deducted under this Division;

that is taken into account in working out *tax offsets under section 355-100 obtained by the *R & D entity for one or more income years.


Paragraphs (a) and (b) of this subsection refer to amounts notionally deducted under this Division (see section 355-105 ).

Amount is reduced by any repayments of the recoupment

For the purposes of subsection (2), reduce the expenditure referred to in subparagraph (1)(c)(i) by any repayments of the *recoupment during an income year.

Cap on extra income tax if recoupment relates to a project

Despite subsection (2), if the *recoupment is covered by subparagraph (1)(c)(ii), the amount mentioned in subsection (2) for the present year cannot exceed the amount worked out using the following formula:

Net amount of the recoupment × R & D expenditure
Project expenditure


net amount of the recoupment
means the total amount of the *recoupment, less any repayments of the recoupment during an income year.

R & D expenditure
means the amount mentioned in subsection (2), disregarding subsection (3).

Related entities

The other entities for the purposes of paragraph (1)(a) are as follows:

(a)    an entity *connected with the *R & D entity;

(b)    an *affiliate of the R & D entity or an entity of which the R & D entity is an affiliate.

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