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 355-445   Feedstock adjustments  

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

(iii) for the decline in value of assets used in acquiring or producing the feedstock inputs; and

(c)    during the present year, a feedstock output, or a transformed feedstock output, (the marketable product ), is:

(i) *supplied by the R & D entity to another entity; or

(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.

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

(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


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.

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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