Income Tax Assessment Act 1997
In addition to its application apart from this section, Division 40 also applies with the changes set out in this section for the purposes of:
(a) paragraph 355-225(1)(b) (excluded expenditure); and
(b) paragraph 355-305(1)(c) ; and
(c) section 355-315 (balancing adjustments). 355-310(2)
Firstly, substitute the following for references to a *taxable purpose in Subdivisions 40-A to 40-D (other than for the purposes of sections 40-100 , 40-105 and 40-110 ):
|Replacing references to a taxable purpose|
|Item||If this application of Division 40 is for the purposes of:||Substitute a reference to:|
|1||paragraph 355-225(1)(b) or 355-305(1)(c)||the purpose of conducting one or more of the *R & D activities covered by paragraph 355-305(1)(b)|
|2||section 355-315||the purpose of conducting one or more of the *R & D activities to which the R & D deductions (within the meaning of that section) relate|
Secondly, assume that Division 40 does not apply to a building, nor to an extension, alteration or improvement to a building, (the building works ) for which the *R & D entity:
(a) can deduct amounts under Division 43 (capital works); or
(b) could deduct amounts under Division 43 :
(i) apart from expenditure being incurred, or the building works being started, before a particular day; or
(ii) had the R & D entity used the building works for a purpose relevant to those building works under section 43-140 (using an area in a deductible way).
Finally, assume that the following provisions had not been enacted:
(a) subsection 40-25(7) (meaning of taxable purpose);
(b) subsection 40-45(2) (assets to which Division 40 does not apply);
(c) section 40-425 (low-value pools);
(d) Subdivision 328-D (capital allowances for small business entities).
Subsection (3) and paragraph (4)(b) mean that deductions under section 355-305 may be available for capital works other than building works.
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