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-E - Notional deductions for decline in value of depreciating assets used for R & D activities  

SECTION 355-310   Notional application of Division 40  

355-310(1)  
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

Note:

Sections 40-100 , 40-105 and 40-110 are about working out an asset ' s effective life. Those sections already refer to the use of the asset for R & D activities.

355-310(3)  
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).

355-310(4)  
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).

Note:

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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