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-F - Integrity Rules  

SECTION 355-405   Expenditure not at risk  

355-405(1)  
An *R & D entity cannot deduct expenditure under section 355-205 or 355-480 if:


(a) when it incurs the expenditure, the R & D entity or its *associate had received, or could reasonably be expected to receive, consideration:


(i) as a direct or indirect result of the expenditure being incurred; and

(ii) regardless of the results of the activities on which the expenditure is incurred; and


(b) that consideration is equal to or greater than the expenditure.

Note:

Section 355-205 is about deductions for R & D expenditure. Section 355-480 is about deductions for earlier year associate R & D expenditure.

355-405(2)  
If:


(a) when an *R & D entity incurs expenditure, the R & D entity or its *associate had received, or could reasonably be expected to receive, consideration:


(i) as a direct or indirect result of the expenditure being incurred; and

(ii) regardless of the results of the activities on which the expenditure is incurred; and


(b) that consideration is less than the expenditure;

the R & D entity cannot deduct under section 355-205 or 355-480 so much of the expenditure as is equal to the consideration.

355-405(3)  
For the purposes of paragraphs (1)(a) and (2)(a), have regard to:


(a) anything that happened or existed before or at the time the expenditure is incurred; and


(b) anything that is likely to happen or exist after that time.

355-405(4)  
This section does not apply to expenditure incurred on *R & D activities covered by paragraph 355-210(1)(b) or (c).

Note:

Those paragraphs cover R & D activities conducted for foreign residents.


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