INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 73B   CERTAIN EXPENDITURE ON RESEARCH AND DEVELOPMENT ACTIVITIES  

73B(1)  

aggregate research and development amount



(c) one-third of the total qualifying building expenditure of the company in relation to the year of income; and

building expenditure
, in relation to an eligible company, means expenditure of a capital nature incurred by the company in:


(a) the acquisition, or the construction, under a contract entered into on or after 1 July 1985, of a building, or of an extension, alteration or improvement to a building owned or leased by the company; or


(b) the construction by the company, being construction that commenced on or after 1 July 1985, of a building, or of an extension, alteration or improvement to a building owned or leased by the company,

being a building, or an extension, alteration or improvement to a building, for use by the company exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities.

undeducted building expenditure
, in relation to an eligible company in relation to a building or an extension, alteration or improvement to a building, means the amount (if any) ascertained by deducting from the amount of building expenditure in relation to that building or that extension, alteration or improvement, as the case may be, the amount or the sum of the amounts allowed or allowable as a deduction or deductions under subsection (17) in relation to that building or that extension, alteration or improvement, as the case may be.

73B(4)   [Qualifying expenditure - use of plant or building]  

Subject to subsection (5), where, during a year of income:


(a) an eligible company commences to use a unit of plant in respect of which the company has incurred an amount of plant expenditure exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities; or


(b) an eligible company commences to use a building, or an extension, alteration or improvement to a building, in respect of which the company has incurred an amount of building expenditure exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities,

that amount shall, in relation to that unit of plant, that building or that extension, alteration or improvement, as the case may be, be taken to be an amount of qualifying plant expenditure or qualifying building expenditure, as the case may be, in relation to the company in relation to the year of income and in relation to each of the 2 succeeding years of income.

73B(5)   [Use not exclusively for research and development activities]  

Where:


(a) apart from this subsection, there would be an amount of qualifying plant expenditure in relation to a unit of plant owned by an eligible company in relation to a year of income or an amount of qualifying building expenditure in relation to a building, or an extension, alteration or improvement to a building, owned by an eligible company in relation to a year of income; and


(b) at any time during the year of income, the company ceases to use that unit of plant, that building or that extension, alteration or improvement, as the case may be, exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities,

there shall be no amount of qualifying plant expenditure in relation to that unit of plant or no amount of qualifying building expenditure in relation to that building, or that extension, alteration or improvement, as the case may be, in relation to the year of income or any succeeding year of income.

73B(5A)   [Commitment to building before 21 November 1987]  

This section does not apply to expenditure incurred by an eligible company in the acquisition or construction of a building or of an extension, alteration or improvement to a building unless:


(a) in the case of acquisition - any contract in respect of that acquisition was entered into before 21 November 1987;


(b) in the case of construction - either of the following subparagraphs applies:


(i) that construction commenced before 21 November 1987;

(ii) any contract in respect of that construction was entered into before 21 November 1987; and


(c) if the expenditure was incurred after 20 November 1987 - the company intended, on 20 November 1987, that the building, or the extension, alteration or improvement to the building, as the case may be, would be for use by the company exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities.

73B(7)   [Change in use temporary]  

For the purposes of this section, a building shall not be taken not to have been used exclusively for the purpose of the carrying on of research and development activities at a particular time if:


(a) its use for that purpose had, at that time, ceased by reason only of a temporary cessation of use of the building by reason of the construction of an extension, alteration or improvement, or the making of repairs, to the building; or


(b) it was, at that time:


(i) maintained ready for use for that purpose; and

(ii) not used or for use for any other purpose,
and its use or intended use for that purpose had not been abandoned.

73B(17)   [Amount of allowable deduction: buildings]  

Subject to this section, where, in a year of income, there is an amount of qualifying building expenditure in relation to an eligible company in relation to a building or an extension, alteration or improvement to a building, one-third of that expenditure is allowable as a deduction from the assessable income of the company of the year of income.

73B(25)   [Destruction of building, extension, alteration or improvement]  

Where:


(a) a deduction has been allowed or is allowable to an eligible company under subsection (17) in respect of expenditure incurred by the company in the acquisition or construction of a building or of an extension, alteration or improvement to a building; and


(b) while the building is owned by the company or, if the building was leased by the company at the time when that expenditure was incurred, while the building is leased by the company, the building or the extension, alteration or improvement, as the case may be, is destroyed,

then:


(c) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and that amount exceeds the consideration receivable by the company in respect of the destruction - an amount equal to that excess is allowable as a deduction from the assessable income of the company of the year of income in which the destruction occurred;


(d) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and the consideration receivable by the company in respect of the destruction exceeds that amount - the assessable income of the company of the year of income in which the destruction occurred shall include so much of that excess as does not exceed the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be; or


(e) in a case where there is no amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be - the assessable income of the company of the year of income in which the destruction occurred shall include so much of the consideration receivable by the company in respect of the destruction as does not exceed the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be.

73B(26)   [Destruction of part of building, etc]  

Where:


(a) a deduction has been allowed or is allowable to an eligible company under subsection (17) in respect of expenditure incurred by the company in the acquisition or construction of a building or an extension, alteration or improvement to a building; and


(b) while the building is owned by the company or, if the building was leased by the company at the time when that expenditure was incurred, while the building is leased by the company, a part (in this subsection referred to as the destroyed part ) of the building or of the extension, alteration or improvement, as the case may be, is destroyed,

then:


(c) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and so much of that amount as is attributable to the destroyed part exceeds the consideration receivable by the company in respect of the destruction of the destroyed part - an amount equal to that excess is allowable as a deduction from the assessable income of the company of the year of income in which the destruction occurred;


(d) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and the consideration receivable by the company in respect of the destruction of the destroyed part exceeds so much of that amount as is attributable to the destroyed part - the assessable income of the company of the year of income in which the destruction occurred shall include so much of that excess as does not exceed so much of the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be, as is attributable to the destroyed part; or


(e) in a case where there is no amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be - the assessable income of the company of the year of income in which the destruction occurred shall include so much of the consideration receivable by the company in respect of the destruction of the destroyed part as does not exceed so much of the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be, as is attributable to the destroyed part.

73B(27)  

(b) after the end of the period referred to in paragraph (28)(b), the company sells or otherwise disposes of the building or the extension, alteration or improvement, as the case may be,

73B(28)   [Sale, disposal, change of use within five years]  

Where:


(a) a deduction is allowed from the assessable income of an eligible company under subsection (17) in respect of expenditure incurred by the company in the acquisition or construction of a building or of an extension, alteration or improvement to a building; and


(b) before the end of the period of 5 years commencing on the day on which the company commenced to use the building or the extension, alteration or improvement, as the case may be, exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities, the company:


(i) sells or otherwise disposes of the building or the extension, alteration or improvement, as the case may be; or

(ii) ceases to use the building or the extension, alteration or improvement, as the case may be, exclusively for that purpose,

any deduction allowed from the assessable income of the company under subsection (17) in respect of the expenditure referred to in paragraph (a) shall, for the purposes of this section other than subsection (20), be deemed never to have been allowable, and the expenditure incurred by the company in the acquisition or construction of the building or of the extension, alteration or improvement, as the case may be, shall be deemed never to have been qualifying building expenditure.

73B(29)   [Commissioner's discretion re subsec (28)]  

Where:


(a) subsection (28) would, apart from this subsection, apply to expenditure incurred by an eligible company in the acquisition or construction of a building or of an extension, alteration or improvement to a building; and


(b) the Commissioner, having regard to:


(i) the nature of the use by the company of the building or of the extension, alteration or improvement, as the case may be, both before and after the occurrence of the event referred to in paragraph (28)(b);

(ii) the circumstances by reason of which that event occurred;

(iii) the period during which the company carried on research and development activities and any period during which it is reasonable to expect that the company will continue to carry on those activities; and

(iv) such other matters relating to the use of the building or the extension, alteration or improvement, as the case may be, or to the activities carried on by the company as the Commissioner considers relevant,
is satisfied that it would be unreasonable for subsection (28) to apply to that expenditure,

that subsection does not apply to that expenditure.

73B(30)   [Deductions under other provisions where sale, etc, within five years]  

If:


(a) subsection (28) applies to expenditure incurred by an eligible company in the acquisition or construction of a building or an extension, alteration or improvement to a building; and


(b) deductions would, apart from this section, have been allowable to the company under section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, under the former Subdivision 387-B or 387-G of that Act, under section 40-515 of that Act (for a water facility) or under SubDivision 40-B of that Act (for a timber mill building or forestry road) in respect of that expenditure;

section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, under the former Subdivision 387-B or 387-G of that Act, under section 40-515 of that Act (for a water facility) or under SubDivision 40-B of that Act (for a timber mill building or forestry road) as the case may be, applies to that expenditure as if this section had never applied to that expenditure.

73B(37)   [Schemes entered into on or after 1 July 1985]  

Where the Commissioner is satisfied that:


(a) before 1 July 1985, an eligible company:


(i) owned a unit of plant or a building;

(ii) entered into a contract or arrangement for the acquisition of a unit of plant or a building; or

(iii) commenced the construction of a unit of plant or a building,
(which unit of plant or building is in this subsection referred to as the ``original unit'' or ``original building'' , as the case may be);


(b) on or after 1 July 1985 and at a time when:


(i) in a case to which subparagraph (a)(i) applies - the company was the owner of the original unit or the original building;

(ii) in a case to which subparagraph (a)(ii) applies - the company was a party to the contract or arrangement or was the owner of the original unit or the original building; or

(iii) in a case to which subparagraph (a)(iii) applies - the company had yet to complete the construction of the original unit or the original building or was the owner of the original unit or the original building,
the company entered into a scheme under which:

(iv) the company became the owner of the original unit or the original building (otherwise than under the contract or arrangement referred to in subparagraph (a)(ii) or, in a case to which subparagraph (a)(iii) applies, by reason of the original unit or the original building having been constructed by the company); or

(v) the company became the owner of a unit of plant or a building (in this subsection referred to as the ``substituted unit'' or ``substituted building'' , as the case may be) identical with, or having a purpose similar to that of, the original unit or the original building and intended by the company to be in lieu of the original unit or the original building;


(c) a deduction under this section would, apart from this subsection, be allowable from the assessable income of the company in respect of expenditure incurred by the company in the acquisition or construction of:


(i) in a case to which subparagraph (b)(iv) applies - the original unit or the original building; or

(ii) in a case to which subparagraph (b)(v) applies - the substituted unit or the substituted building; and


(d) the company entered into the scheme for the purpose, or for purposes that included the purpose, of obtaining a deduction under this section in respect of that expenditure;

the Commissioner may refuse to apply this section to that expenditure.

73B(38)   [``Acquisition of plant or building'']  

A reference in subsection (37) to the acquisition by a company of a unit of plant or a building shall be read as including a reference to the construction of the unit or building for the company by another person.


 

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