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 355-315   Balancing adjustments - assets only used for R & D activities  

355-315(1)  
This section applies to an *R & D entity if:


(a) a *balancing adjustment event happens in an income year (the event year ) for an asset *held by the R & D entity; and


(b) the R & D entity cannot deduct an amount under section 40-25 , as that section applies apart from:


(i) this Division; and

(ii) former section 73BC of the Income Tax Assessment Act 1936 ;
for the asset for an income year; and


(c) the R & D entity is entitled under section 355-100 to *tax offsets for one or more income years for deductions (the R & D deductions ) under section 355-305 for the asset; and


(d) the entity is registered under section 27A of the Industry Research and Development Act 1986 for one or more *R & D activities for the event year; and


(e) if Division 40 applied with the changes described in section 355-310 :


(i) the entity could deduct for the event year an amount under subsection 40-285(2) for the asset and the balancing adjustment event; or

(ii) an amount would be included in the entity's assessable income for the event year under subsection 40-285(1) for the asset and the balancing adjustment event.
Note 1:

This section applies in a modified way if the entity also has deductions for the asset under former section 73BA or 73BH of the Income Tax Assessment Act 1936 (see section 355-320 of the Income Tax (Transitional Provisions) Act 1997 ).

Note 2:

Section 40-292 applies if the entity can deduct an amount under section 40-25 , as that section applies apart from this Division and former section 73BC of the Income Tax Assessment Act 1936 .

Notional deduction

355-315(2)  
If the *R & D entity could deduct for the event year an amount under subsection 40-285(2) for the asset and the event if Division 40 applied as described in paragraph (1)(e), the R & D entity can deduct that amount for the event year. Amount to be included in assessable income

355-315(3)  
If an amount (the section 40-285 amount ) would be included in the *R & D entity's assessable income for the event year under subsection 40-285(1) for the asset and the event if Division 40 applied as described in paragraph (1)(e), the sum of that amount and the following amount is included in the R & D entity's assessable income for the event year:


Adjusted section 40-285 amount × 1
3

where:

adjusted section 40-285 amount
means so much of the section 40-285 amount as does not exceed the total decline in value.

total decline in value
means the asset's *cost, less its *adjustable value, worked out under Division 40 as it applies as described in paragraph (1)(e).


 

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