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-C - Entitlement to tax offset  

SECTION 355-100   Entitlement to tax offset  

If notional deductions are between $20,000 and $150 million

355-100(1)  


An *R & D entity is entitled to a *tax offset for an income year equal to the percentage, set out in the table, of the total of the amounts (if any) that the entity can deduct for the income year under any or all of the following provisions:


(a) section 355-205 (R & D expenditure);


(b) section 355-305 (decline in value of R & D assets);


(c) (Repealed by No 92 of 2020)


(d) section 355-480 (earlier year associate R & D expenditure);


(e) section 355-520 (decline in value of R & D partnership assets);


(f) (Repealed by No 92 of 2020)


(g) section 355-580 (CRC contributions).


Rate of R & D tax offset
Item In this case: The percentage is:
1 the *R & D entity ' s *aggregated turnover for the income year is less than $20 million (and item 2 of this table does not apply) the R & D entity ' s *corporate tax rate for the income year, plus 18.5 percentage points
2 at any time during the income year an *exempt entity, or combination of exempt entities, would control the *R & D entity in a way described in section 328-125 (connected entities) if:
(a) references in section 328-125 to 40% were references to 50%; and
(b) subsection 328-125(6) were ignored
the R & D entity ' s *corporate tax rate for the income year
3 any other case the R & D entity ' s *corporate tax rate for the income year

Note 1:

The tax offset will be a refundable tax offset if item 1 of the table applies (see section 67-30 ).

Note 2:

The tax offset is increased under subsection (1A) of this section if item 2 or 3 of the table applies.

R & D premium

355-100(1A)  


If item 2 or 3 of the table in subsection (1) applies to the *R & D entity, the amount of the *tax offset for the income year is increased by the sum of the amounts (if any) worked out for each item of the following table for that entity:


Tiered offset rates
Item Work out the part of the total amount mentioned in subsection 355-100(1) that: Multiply that part by this percentage:
1 exceeds nil but does not exceed 2% of the *R & D entity ' s total expenses for the income year worked out under section 355-115 8.5%
2 exceeds 2% of the *R & D entity ' s total expenses for the income year worked out under section 355-115 16.5%

If notional deductions are less than $20,000

355-100(2)  


However, if the total amount mentioned in subsection (1) is less than $20,000, the *R & D entity is instead entitled to a *tax offset for the income year, worked out in accordance with subsections (1) and (1A), as if that amount were instead the total of the following kinds of expenditure (if any):


Expenditure not subject to $20,000 threshold
Item Kind of expenditure
1 Expenditure:
(a) that the *R & D entity can deduct under section 355-205 (R & D expenditure) for the income year; and
(b) that was incurred to a research service provider (within the meaning of the Industry Research and Development Act 1986 ) that is not an *associate of the R & D entity or of the relevant *R & D partnership (as appropriate); and
(c) that was for the provider to provide services, within a research field for which the provider is registered under Division 4 of Part III of that Act, applicable to one or more of the *R & D activities to which the deduction relates
2 Expenditure that the *R & D entity can deduct under section 355-580 (CRC contributions) for the income year

If notional deductions exceed $150 million

355-100(3)  


Despite subsections (1) and (1A) , if the total amount mentioned in subsection (1) exceeds $150 million, the *R & D entity is instead entitled to a *tax offset for the income year equal to the sum of:

(a)  the amount worked out in accordance with those subsections as if that amount were $150 million; and

(b)  the product of the excess and the R & D entity ' s *corporate tax rate for the income year.


 

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