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Ruling
Subject: R&D Tax Incentive
Question 1
Is the taxpayer company able to access the new Research and Development Tax Incentive from 1 January 2012 during its transitional accounting period
Answer
Yes.
This ruling applies for the following periods:
1 January 2012 - 30 September 2012.
The scheme commences on:
1 January 2012.
Relevant facts and circumstances
The taxpayer has a transitional accounting period.
The taxpayer states it was eligible for the R&D Tax Incentive from 1 January 2012.
The taxpayer is seeking confirmation that it can access the R&D Tax Incentive Program from 1 January 2012 to late 2012.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 355-100
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 1997 Subsection 4-10(2)
Income Tax Assessment Act 1997 Subsection 9-5(2)
Reasons for decision
The R&D tax incentive, contained within section 355 of the Income Tax Assessment Act 1997 (ITAA 1997), applies to expenditure incurred and the use of depreciating assets in an income year commencing on or after 1 July 2011.
Section 355 of the ITAA 1997 uses the term 'income year', in relation to the R&D tax incentive.
The taxpayer seeks guidance on whether it can access the R&D Tax incentive given it has a X month transitional accounting period commencing before 1 July 2011.
The taxpayer advises that they satisfied the eligibility requirements for the R&D Tax Incentive from 1 January 2012.
Subsection 995-1(1) states that the basic meaning of the term 'income year' is given by subsections 4-10(2) and 9-5(2). It goes on to state that a reference to an income year includes an adopted accounting period (where the accounting period is adopted in place of a particular income year).
Subsections 4-10(2) and 9-5(2) state that if the accounting period is not the same as the financial year, the accounting period is an income year. An accounting period is generally accepted as being a period of twelve months.
In the taxpayer's case, the accounting period will be the 12 month period ending 30 September 2012 (i.e. 1 October 2011 - 30 September 2012). Therefore the taxpayer's 'income year' in question would start after 1 July 2011, and they would therefore be able to access the offset in that respect.
However, the taxpayer states that they are only eligible for the tax offset from 1 January 2012. Therefore, they can only access the offset from 1 January 2012 to 30 September 2012.
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