Income Tax Assessment Act 1936

Div 3 heading inserted by No 172 of 1978.

S 73QB repealed by No 93 of 2011, s 3 and Sch 3 item 44, effective 8 September 2011. For application, savings and transitional provisions see note under s 82KZLB . S 73QB formerly read:

SECTION 73QB EXTRA DEDUCTION FOR INCREASE IN EXPENDITURE ON FOREIGN OWNED RESEARCH AND DEVELOPMENT  
Prerequisites for deduction

73QB(1)
An eligible company may deduct an amount for the Y ₀ year of income if:

(a) the company can deduct an amount for that year under subsection 73B(14C) for expenditure incurred in the company ' s group membership period; and

(b) for each of the Y _-1 , Y _-2 and Y _-3 years of income, any of the following conditions is met:

(i) the eligible company could deduct for the year of income an amount under subsection 73B(14C) for expenditure in its group membership period;

(ii) one of the eligible company ' s other group members could deduct for the year of income an amount under subsection 73B(14C) for expenditure in its group membership period;

(iii) the year of income is one (a nil expenditure year ) for which both the conditions in subsection (2) are met;

(whether or not the same condition in this paragraph is met for 2 or more of those years, and whether or not such a condition is met by the same company for 2 or more of those years); and

(c) the amount (the eligible company ' s share of the foreign owned part of the adjusted increase in expenditure on R & D by the group ) worked out under subsection (4) is more than zero.

73QB(2)
For the purposes of subparagraph (1)(b)(iii), the conditions for a nil expenditure year are as follows:

(a) neither the eligible company nor any other group member (determined under section 73R ) of the eligible company existed at any time in the nil expenditure year or the 10 immediately preceding years of income;

(b) at no time in the nil expenditure year or the 10 immediately preceding years of income did any of the following carry on business in Australia:

(i) a foreign company that was grouped under section 73L with the eligible company at any time in the Y ₀ , Y _-1 , Y _-2 or Y _-3 year of income;

(ii) a foreign company that was grouped under section 73L with another group member (under section 73R ) of the eligible company at any time during the other group member ' s group membership period (under section 73R );

(iii) a person who was grouped under section 73L with a foreign company described in subparagraph (i) or (ii) at any time in the nil expenditure year or the 10 immediately preceding years of income.

Note:

Section 73R provides for:

(a) primary group members to be determined on the basis of the relationship between companies at the end of the Y ₀ year of income; and

(b) secondary group members to be determined on the basis of the relationship between a company and a primary group member during the primary group member ' s group membership period (which ends at the end of the Y ₀ year of income and starts at or after the start of the Y _-3 year of income).

Amount of deduction

73QB(3)
The eligible company may deduct an amount for the Y ₀ year of income equal to 75% of the eligible company ' s share of the foreign owned part of the adjusted increase in expenditure on R & D by the group.

73QB(4)
The eligible company ' s share of the foreign owned part of the adjusted increase in expenditure on R & D by the group is the amount worked out using the formula:

Increase in expenditure on foreign owned R & D by the eligible company	×	Net increase in expenditure on foreign owned R & D by the group	×	Adjusted increase in expenditure on R & D by the group
Total increase in expenditure on foreign owned R & D by the eligible companies in the group		Net increase in expenditure on Australian owned R & D by the group			+	Net increase in expenditure on foreign owned R & D by the group

where:

adjusted increase in expenditure on R & D by the group
means the amount worked out under section 73RE .

increase in expenditure on foreign owned R & D by the eligible company
means the amount worked out under subsection 73RB(1) .

net increase in expenditure on Australian owned R & D by the group
means the amount worked out under section 73RC .

net increase in expenditure on foreign owned R & D by the group
means the amount worked out under section 73RD .

total increase in expenditure on foreign owned R & D by the eligible companies in the group
means the amount worked out under subsection 73RB(2) .

Note:

The amount worked out using the formula will not be more than zero if at least one of the following is zero:

(a) the increase in expenditure on foreign owned R & D by the eligible company;

(b) the net increase in expenditure on foreign owned R & D by the group;

(c) the adjusted increase in expenditure on R & D by the group.

Solitary company may be able to deduct under subsection (1)

73QB(5)
To avoid doubt, an eligible company for which there are no other group members may be able to deduct an amount under subsection (1).

Note:

For an eligible company for which there are no other group members, the values of the following components of the formula in subsection (4) will all be the same:

(a) the increase in expenditure on foreign owned R & D by the eligible company;

(b) the total increase in expenditure on foreign owned R & D by the eligible companies in the group;

(c) the net increase in expenditure on foreign owned R & D by the group.

S 73QA and 73QB substituted for s 73Q by No 164 of 2007 , s 3 and Sch 11 item 34, effective 25 September 2007. For application provision, see note under s 73B(1AAA) . For transitional provisions regarding reduced notional expenditure on foreign owned R & D, see note under s 73P(1) .