Class Ruling

CR 2012/109

Income tax: research and development tax incentive: membership funding for the ACA Low Emissions Technologies Program

• Please note that the PDF version is the authorised version of this ruling.

What this Ruling is about

1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates.

Relevant provision(s)

2. The relevant provisions dealt with in this Ruling are:

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section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997);

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section 355-100 of the ITAA 1997;

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section 355-205 of the ITAA 1997;

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section 355-210 of the ITAA 1997;

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section 355-435 of the ITAA 1997;

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section 82KZL of the Income Tax Assessment Act 1936 (ITAA 1936) ;

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section 82KZMA of the ITAA 1936; and

•

section 82KZMD of the ITAA 1936.

All subsequent legislative references are to the ITAA 1997 unless otherwise indicated.

Class of entities

3. The class of entities to which this Ruling applies comprises 'R&D entities', as defined by section 355-35, who are liable for levy contributions under the ACA Low Emissions Technologies Program, and who

•

are registered with Innovation Australia, in accordance with the requirements of subparagraph 355-205(1)(a)(i) for the relevant years of income;

•

have notional deductions identified by reference to paragraphs 355-100(1)(a)-(g) for the relevant years of income which equal or exceed $20,000; and

•

are not a small business entity as defined in section 328-110.

4. In this Ruling the term 'Contributor' is used to refer to those companies that are ultimately obliged to pay levy contributions to ACA Low Emissions Technologies Limited (ACALET). In the Contribution Deed discussed below, those companies are either the 'mine owner(s)' or 'operator(s) of coal producing assets' or 'contributor(s)' where no separate 'mine owner(s)' are identified in the Contribution Deed.

5. This Ruling does not apply to R&D entities that are not registered for the relevant years of income with Innovation Australia. The publication of this Ruling does not relieve companies making ACALET contributions of the obligation to make separate applications for registration of their activities under section 27A of the Industry Research and Development Act 1986 (IR&D Act 1986).

Qualifications

6. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. This Ruling only applies to contributions used to fund the projects, and the management and administration expenses associated with those projects, which are identified in the following agreements:

•

Carbon Geostorage Initiative Project Funding Agreement (CGI Project Funding Agreement);

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Delta Carbon Capture and Storage Project Funding Agreement (Delta Project Funding Agreement); and

•

New South Wales State Wide Assessment of CO₂ Storage Capacity Project Funding Agreement (NSW Project Funding Agreement).

7. Further, this Ruling does not apply to any contributions made in a relevant year of income that are less than $1,000 (in total for that year of income).

8. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 12 to 64 of this Ruling.

9. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then:

•

this Ruling has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled; and

•

this Ruling may be withdrawn or modified.

10. This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:

Commonwealth Copyright Administration

Copyright and Classification Policy Branch

Attorney-General's Department

3-5 National Circuit

Barton ACT 2600

or posted at: http://www.ag.gov.au/cca

Date of effect

11. This Ruling applies from 1 July 2011 to 30 June 2017. The Ruling continues to apply after 30 June 2017 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

Scheme

12. The following description of the scheme is based on information provided by the applicant. The following documents, or relevant parts of them form part of and are to be read with the description:

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application for class ruling and accompanying attachments sent via email on 27 October 2011;

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letter from the applicant and accompanying attachments dated 11 November 2011;

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letter from the applicant and accompanying attachments dated 24 February 2012;

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letter from the applicant and accompanying attachments dated 9 March 2012;

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letter from the applicant and accompanying attachments dated 4 April 2012; and

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the Minutes of the meeting that took place on 11 April 2012, between representatives of the Australian Taxation Office (ATO) and the applicant.

Background

13. The Coal21 National Action Plan was formally issued on March 2004 by the Minister for Industry Tourism and Resources, highlighting the national challenge facing Australia with substantial greenhouse gas emission impact from fossil fuel use. The plan identified options to address the greenhouse gas emissions impact by an intensive program of research, development and demonstration in the areas of low emissions technologies associated with the use of coal.

14. The Australian black coal industry accepted the need to arrange a new program consistent with the Coal21 National Action Plan. The ACA Low Emissions Technologies Program (ACALET Program) was established to support research, development and demonstration aimed at developing clean coal technologies. Funding for the ACALET Program is provided by way of voluntary levies.

ACALET

15. ACALET has been established to manage the ACALET Program. ACALET is not a research service provider under Division 4 of the IR&D Act 1986.

16. Clause 4 of ACALET's Constitution describes its objects, which include:

•

providing for the collective and integrated research of coal for the purposes of providing strategic leadership to the coal and associated industries with particular regard to potential low emissions technologies applicable to the use of coal;

•

allocating the funds raised among registered research agencies and other research agencies and demonstration project agencies chosen by the company to undertake research and/or demonstration projects;

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acting as a catalyst to stimulate research and development and demonstration project interest within the coal and associated industries;

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improving the management and application of coal research and demonstration projects in Australia;

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ensuring a more efficient use of Australia's black coal resources;

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increasing the economic, environmental safety and social benefits to the coal industry and wider community;

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promoting competitiveness, sustainable use and management of Australia's coal resources; and

•

entering into contracts with and engaging organisations to manage research projects and/or demonstration projects on behalf of groups of companies.

17. Each coal producer group operating in Australia has the opportunity to become a member of ACALET. The Board of ACALET comprises of up to 15 directors.

18. Clause 6 of ACALET's Constitution governs membership of the company. In particular clause 6.10 provides that:

[each] Member must enter into an agreement with the Company to pay contributions or levies to the Company which will be applied towards the promotion of the objects of the Company set out in clause 4.

19. As detailed in paragraph 14 of this Ruling, participation in this arrangement is voluntary. Any payments made by a contributing company under this scheme, who is also a member of ACALET, are taken to be made voluntarily, and not in its capacity as a member of ACALET.

Contribution Deed

20. Each affected coal producer (referred to as an 'operator of coal producing assets' or 'contributor') enters into a Contribution Deed with ACALET under which they are liable to pay contributions (levies). Agency clauses are present in the agreement, which demonstrate that in some circumstances, the operator of coal producing assets is entering into the Contribution Deed on behalf of the relevant 'mine owners'.

21. The Contribution Deed sets out the rights and obligations of ACALET and the Contributor, in particular the:

•

agreement to pay contributions, clause 2;

•

amount of the contributions, clause 3; and

•

actual payment of contributions, clause 4.

22. The Contributors agree to pay levies to ACALET in consideration for its promise that they will be applied exclusively in respect of 'research and development' (R&D) and/or 'demonstration projects' as defined in the Contribution Deed and also for management and administration expenses in respect of R&D and/or 'demonstration projects'. Further, the Contribution Deed also requires that the results of the R&D will be made available to the Contributor to the extent possible, under the terms of the various agreements entered into by ACALET in relation to the ACALET Program.

23. Contributions accrued by the Contributor are calculated up to a maximum of $0.20 per tonne of coal produced by the Contributor from the coal producing assets from 30 June 2007. The Contributor must pay to ACALET the amount of contribution equal to the accrual balance (which increases by quarterly sales multiplied by the rate of contribution and decreases by any payments made), unless a payment notice has issued. If it has then the Contributor must only pay the amount on the Payment Notice. Contributions are made on a quarterly basis.

24. All contributions paid to ACALET become property of ACALET and cannot be refunded.

25. The Contribution Deed defines R&D to mean scientific, technical or economic research in connection with the beneficiation and use of coal or products derived from coal, including the demonstration and development of the results of that research and includes:

(a)

training of persons for the purpose of any such R&D;

(b)

publication of reports, periodicals, books and papers in connection with such R&D;

(c)

dissemination of information and advice in connection with scientific, technical or economic matters related to exploration, mining and beneficiation of coal or products derived from coal;

(d)

matters incidental or relating to a matter referred to in this definition; and

(e)

matters incidental or relating to the obligations of ACALET under the Contribution Deed including costs incurred in collection of contributions.

26. The Contribution Deed defines 'demonstration project' to mean a project with the objective of demonstrating the technical and/or commercial potential of a new low emissions technology or process, and includes the application of an existing overseas technology or process to Australian circumstances.

27. ACALET is required to provide expenditure statements to Contributors pursuant to clause 9(d) of the Contribution Deed. This requires that ACALET provide biannual reports to Contributors indicating the apportionment of the expenditure of contributions to R&D and demonstration projects. ACALET is also required to provide quarterly reports to Contributors, as it recognises that companies will have a range of tax year-end dates. The quarterly reports are derived from a 'contributor reporting spreadsheet' developed by ACALET, and set out the Contributor's percentage of the eligible R&D expenditure and other expenditure spent on the relevant project or on related overheads for the quarter. It is intended that a Contributor's claim under Division 355, in relation to expenditure incurred to ACALET for a particular income year, should be able to be compiled by taking the appropriate details from the quarterly reports for the four quarters falling within that taxpayer's particular income year.

28. The Contribution Deed commences on the effective date and will be reviewed by the parties during the three month period expiring on 30 June 2017. It envisages continuing to the later of such date that the parties agree upon, or the date on which the accrual balance is nil, unless terminated earlier. The effective date will vary for Contributors, as some entered into the Contribution Deed prior to 30 June 2007 and some after this date.

29. The Contribution Deed and the manner in which the program is executed provide rights to coal producers in relation to the R&D to be undertaken, such that control of the R&D resides with the Contributors.

30. Companies representing over 95% of black coal production capacity have committed to participate in the ACALET Program by making contributions to ACALET for the period 1 July 2007 to 30 June 2017.

31. The expenditure is not a 'pre-RBT obligation' as defined in subsection 82KZL(1) of the ITAA 1936.

ACALET's funding and operations

32. Contributions paid to ACALET by the Contributors are (in part) used to fund the operations of projects carried out in accordance with one of the funding agreements identified in paragraph 6 of this Ruling.

33. The R&D activities undertaken in accordance with the CGI Project Funding Agreement, Delta Project Funding Agreement, and the NSW Project Funding Agreement (relevant projects), are described in paragraphs 50 to 62. In this Ruling a reference to 'relevant project(s)', 'relevant project activity(ies)', 'relevant steering committee(s)', and 'relevant funding agreement(s)' refers to those three funding agreements both individually and severally as applicable.

34. ACALET has entered into both the CGI and NSW Project Funding Agreements with the governments of the States of Queensland and New South Wales respectively. The Delta Project Funding Agreement is a tripartite funding agreement executed between ACALET, the Commonwealth Government, the State of New South Wales and Delta Electricity.

35. Under the relevant funding agreements ACALET has agreed to provide funding for the relevant projects being undertaken. It has been agreed that all funding provided by ACALET and other parties must be used for the sole purpose of carrying out the relevant projects and must not be used for any other purpose.

36. The relevant projects are carried out on a collaborative basis with cash and in kind contributions also made by other parties to the relevant funding agreement. Some of those parties also provide background intellectual property (IP) to be used in the relevant project.

37. Under the relevant funding agreements, it is agreed that for the duration of that agreement ACALET will be provided with reports setting out:

•

an estimate of the proposed expenditure relating to the relevant project for the next quarter, apportioned between R&D expenditure and demonstration expenditure; and

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a statement reconciling expenditure including apportionment between R&D expenditure and demonstration expenditure actually incurred during the immediately proceeding quarter and the previous estimate of the proposed expenditure relating to the relevant project for the quarter.

38. Under the relevant funding agreement a steering committee is established, which amongst other responsibilities, is required to oversee the preparation of both an annual program and budget for the relevant project. The relevant funding agreement provides a process for the approval and adoption of the annual program and budget by the relevant steering committee, and ultimately ACALET. It is also agreed that ACALET will have access to certain other reports, which the relevant steering committee must ensure are prepared for approval. Those reports are:

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quarterly reports showing the progress of the relevant project against the operating plan and quarterly accounts; and

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annual reports prepared for each financial year providing details including the annual accounts, the annual project program and the status of the relevant project conducted pursuant to that program and the annual budget for the following year.

39. With the exception of the NSW Project Funding Agreement, some quarterly reports have been provided illustrating the apportionment of the contributions made by the parties to the relevant projects. This includes contributions made by ACALET on behalf of its Contributors, detailing the expenditure which is eligible R&D expenditure under Division 355, and that which is not.

40. The relevant steering committee formed under the relevant funding agreement must prepare work programs and budgets before work on the project can commence. This information must be approved by the parties to the relevant project. The relevant steering committee will oversee the preparation of annual statements, projected cash flow and monthly reconciliation reports specifying details including the relevant project's total expenditure to date.

41. It is expected that the information prepared for the relevant steering committee's purposes will be provided to ACALET. This information will be utilised by ACALET in the preparation of quarterly information to be provided to the Contributors.

42. IP resulting from the relevant projects will not be legally owned by the Contributors. Further, the Contributors will not own any assets acquired in the course of the relevant project, nor will they be the holders of any Division 40 depreciating asset in relation to the relevant project. Further, by making contributions to the ACALET Program, the Contributors are not acquiring or acquiring the right to use any existing technology for the purposes of R&D activities.

43. Under the terms of the relevant funding agreement, ACALET or such other persons as ACALET nominates, must be provided with a final report describing all work done in connection with the relevant project supported by the relevant funding agreement. It is agreed that ACALET may publish the final report. ACALET will make this report available to each Contributor.

44. Contributors receive rights in relation to the use of project IP for internal purposes. Other parties involved in the relevant projects may also have access to project IP.

45. Benefits received by Contributors and other parties to the relevant project, which includes their interest in the results of the relevant project, are commensurate with the contributions made.

46. Some contributions made by the Contributors to ACALET are also used by ACALET for management and administration activities in respect of the relevant projects.

47. The payment of levies to ACALET by the Contributors constitutes 'expenditure incurred' for the purposes of ascertaining entitlement to a notional deduction under section 355-205, or a general deduction under section 8-1. Levies paid by each Contributor to which this Ruling applies, for each relevant income year, are $1,000 or more.

48. Contributions do not produce any enduring benefit or advantage to the Contributor, but rather are intended to assist them in marketing of their products.

R&D activities under the relevant projects

49. The R&D activities undertaken in accordance with the relevant funding agreements are described in paragraphs 50 to 62. The description of the R&D activities is a summary only.

Carbon Geostorage Initiative Project (CGI Project)

50. The CGI Project is a two stage process for the identification and assessment of CO₂ storage sites. The CGI Project comprises a regional basis level assessment for five selected priority areas (being the Eromanga, Surat and Gallilee basins and the Wunger Ridge/Roma Shelf regions of the Bowen Basin).

51. The regional basis level assessment involves obtaining seismic data, and information sourced through drilling activities so as to determined:

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Seal capacity - threshold entry pressure and CO₂ column retention height;

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Seal strength - fracture gradient, compressive strength, Poisson's ratio, etcetera;

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Reservoir permeability and porosity;

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Reservoir relative permeability;

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Mineralogical composition and rock reactivity;

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Internal rock texture;

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Well logs;

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Formation test results - in situ permeability and reservoir performance analysis;

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Sequence stratigraphical interpretation of the Surat and Galilee basins - prediction of reservoir and seal continuity and compartmentalisation;

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Revised geological models of the subsurface in the Surat and Galilee basins (also segments of the Bowen basin);

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Dynamic simulations of subsurface fluid behaviour in the Surat and Galilee basins (also segments of the Bowen basin);

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Revised hydrodynamic models in the Surat and Galilee basins (also segments of the Bowen basin);

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Containment security assessment for the:

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Moolayember Formation in both the Bowen and Galilee basins; and

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Evergreen Formation in the Surat Basin;

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Injection performance assessment for the:

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Clematis Group/Formation in the Bowen and Galilee basins; and

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Precipice Sandstone in the Surat Basin.

Delta Carbon Capture and Storage Project (Delta Project)

52. The objective of the Delta Project is for Delta to demonstrate integrated post combustion capture (PCC), transport and permanent geological storage of carbon dioxide (storing up to 100,000 tonnes of carbon dioxide per annum in a saline aquifer) from a Delta black coal power station. The Delta Project will take place predominantly in New South Wales.

53. The Delta Project is a two stage project. The first stage is the project design, development and approvals stage. The second stage is the construction and operation phase. ACALET has agreed to provide funding for the first stage.

Technology Selection and Design

54. Specific design considerations arising from the project include:

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research and identification of capture plant capacity and location;

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research into capture plant specifications, including integration points and method;

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solvent selection and capacity (for example, amine, chilled ammonia etcetera);

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options to improve CO₂ capture - this may include the results from lab scale R&D developed by partner organisations;

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studies considering whether 'detuning' the base technology to reduce CO₂ grade produced is possible, and what influence this will have on efficiency and effectiveness of the overall PCC process;

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study and review of potential impacts (for example, whether there are higher levels of impurities) of a detuned process and consideration of regulatory requirements; and

•

design of a plant configuration which will function efficiently and effectively under Australian conditions.

Transport

55. Specific transport considerations arising from the Delta Project include:

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research and study into the potential transport options available (pipeline, road, rail). Small scale studies and modelling will be conducted to develop an understanding of the risks (for example, CO₂ escaping) and the potential benefits (for example, effectiveness and efficiency);

•

developing a transport solution based on the above; and

•

testing of the above design under real world conditions.

Aspects of this R&D will also look at the effect of varying the quality of CO₂ and the effect on transport and storage)

Storage

56. Specific storage considerations arising from the Delta Project include:

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geosequestration site selection studies including preliminary site characterisation and analysis;

•

detailed geological characterisation of high potential sites;

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2D and 3D seismic tests;

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data well and core sample drilling;

•

seismic, well log and core data analysis;

•

reservoir modelling;

•

baseline atmospheric and soil data collection;

•

flora and fauna studies;

•

test work and development of injection mechanisms; and

•

development of techniques to monitor stability of CO₂ injected into host rock.

New South Wales State Wide Assessment of CO₂ Storage Capacity Project (NSW Project)

57. The objective of the NSW Project is to identify sites in New South Wales that are suitable for geological storage of CO₂ and to demonstrate the use of Carbon Capture and Storage (CCS) as a way of reducing greenhouse gas emissions.

58. The NSW Project is the first two stages of a three stage work project. The NSW Project will involve the drilling of wells and undertaking of 2D seismic in the Sydney-Gunnedah Basin, the Darling Basin and the Clarence-Morton Basin.

NSW Post-Combustion Capture and Storage demonstration project

59. The NSW CCS Demonstration Project aims to test PCC technology with integrated storage at an existing conventional pulverised coal combustion power station. The project is intended to commence operation in the first half of 2014. The demonstration will retrofit a 100,000 tonne per year PCC module to an existing coal fired power station. The captured CO₂ will then be compressed into a super critical state, transported and injected into deep underground rock formations located close to the project for permanent disposal.

60. The development and approvals stage is, in effect, a feasibility study with commencement of Front End Engineering Design (FEED) to ensure the project meets the 2014 operational commencement date.

Rationale for Basins of interest

61. Studies have been carried out on 16 identified areas of interest in the Darling Basin and several areas of potential storage in the Sydney Basin. Further, the Clarence-Moreton Basin, Gunnedah Basin and Oaklands Basin have also been regarded as additional potential storage sites due to their geology, structural features and stratigraphical sequences.

62. Data generated by exploration activities and data acquisition in the form of 2D seismic and basin analysis through well log and core evaluation undertaken give encouraging indications as to the potential storage capacity of these basins.

No research service provider or CRC contributions

63. Contributions are not expenditure incurred to a research service provider (RSP) within the meaning of the IR&D Act 1986, or a Cooperative Research Centre ( CRC ) under the Commonwealth CRC program.

Commonwealth funding

64. The Commonwealth has agreed to provide grant funding for the purposes of the relevant projects which are funded under the various funding agreements.

Ruling

R&D expenditure giving rise to a tax offset

65. For the years of income ending 30 June 2012 to 30 June 2017 inclusive (or equivalent substituted accounting periods), to the extent that a Contributor pays levies in an income year that:

•

amount to $1,000 or more;

•

are for R&D activities as defined in section 355-20; and

•

represent expenditure arising under section 355-205.

they will be entitled to a tax offset calculated in accordance with section 355-100. Further, subsection 355-210(2) will not preclude a notional deduction arising under section 305-205.^[1]

66. A notional deduction is not allowable under section 355-205 to a Contributor:

•

for any part of the contributions incurred on activities that are not R&D activities, as defined in section 355-20;

•

for any part of the contributions incurred on R&D activities for which the Contributor is not registered under section 27A of the IR&D Act 1986 for each of the income years in question; or

•

if the notional deductions used in calculating their entitlement to a tax offset under section 355-100 are less than $20,000.

67. The Commissioner acknowledges that any opinion formed about the R&D activities referred to in this Ruling can be overridden by Innovation Australia (the Board). Therefore, the Commissioner does not express an opinion about these activities and whether they are R&D activities as defined in section 355-20. This Ruling is made on the presumption (unless told otherwise by the Board) that the activities are R&D activities as defined under section 355-20.

Section 82KZMD of the ITAA 1936

68. Where expenditure is notionally deductible under section 355-205, and the R&D activities to which the expenditure relates are not carried out in the current income year, section 82KZMD of the ITAA 1936 applies, such that the timing and amount of the deduction is allocated over the relevant eligible service period.

Clawback - Subdivision 355-G

69. Subdivision 355-G does not apply to any expenditure incurred by a Contributor if the requirements in section 355-440 are not met. Contributors are not recipients of any funds (or other form of recoupment):

•

paid under the Commonwealth Funding Agreement; or

•

from an Australian government agency, or a State/Territory body (STB) within the meaning of Division 1AB of Part III of the ITAA 1936.

70. As participation in the relevant projects does not result in a Contributor receiving any of these funds, they will not be required to pay extra income tax under section 355-435 in relation to this participation.

71. If a Contributor is a recipient of the funds referred to in paragraph 69, and wants to know whether Subdivision 355-G applies to them they should apply for a private ruling.

Section 8-1

72. For the years of income ending 30 June 2012 to 30 June 2017 inclusive (or equivalent substituted accounting periods), the portion of the levy paid by a Contributor to the ACALET Program, which does not qualify for a notional deduction under section 355-205, will be deductible under section 8-1.

Section 82KZMD

73. Where expenditure deductible under section 8-1 relates to activities which are not carried out in the current income year, section 82KZMD of the ITAA 1936 applies, such that the timing and amount of the deduction is allocated over the relevant eligible service period.

Commissioner of Taxation
28 November 2012

Appendix 1 - Explanation

Meaning of R&D activities and other terms

74. R&D activities are defined by reference to section 355-20. This Ruling applies only to those Contributors who are correctly registered with Innovation Australia, so that the activities being undertaken in accordance with one (or any number) of the relevant funding agreements are regarded as being 'R&D activities' undertaken by the Contributors.

75. A Contributor cannot rely on this Ruling if the Board determines that:

•

a Contributor is not eligible for registration in relation to the registered project activities conducted in accordance with the relevant funding agreement; or

•

the registered project activities do not constitute core R&D activities (within the meaning of section 355-25), or supporting R&D activities (within the meaning of section 355-30).

R&D Entities

76. R&D entities are defined in section 355-35 as:

355-35 R&D Entities

(1)

Each of the following is an R&D entity:

(a)

a body corporate incorporated under an *Australian law;

(b)

a body corporate incorporated under a *foreign law that is an Australian resident.

Note: Each of the above paragraphs extends to a body corporate acting in its capacity as trustee of a public trading trust (see subsection 102T(9) of the Income Tax Assessment Act 1936).

(2)

A body corporate incorporated under a *foreign law that:

(a)

is a resident of a foreign country for the purposes of an agreement in force between that country and Australia that:

(i)

is a double tax agreement (as defined in Part X of the Income Tax Assessment Act 1936); and

(ii)

includes a definition of permanent establishment ; and

(b)

carries on business in Australia through a permanent establishment (within the meaning of that definition) of the body corporate in Australia;

is an R&D entity to the extent that it carries on business through that permanent establishment.

(3)

However, an *exempt entity cannot be an R&D entity .

77. The class of persons to which this Ruling applies (Contributors) are R&D entities within the meaning of section 355-35. Therefore this requirement is satisfied for the class of persons to which this Ruling applies.

Entitlement to tax offset

78. For the purposes of this Ruling when calculating a Contributor's entitlement to an R&D tax offset it is necessary to first ascertain that they have notional deductions (for the purposes of Subdivision 355-C) for the year of income, that are at least $20,000. This is not to say that a Contributor must make contributions to ACALET of $20,000 each year. Rather, it is necessary that the R&D activities for which the Contributor is registered with Innovation Australia, result in them having notional deductions for the purposes of Subdivision 355-C that are at least $20,000 (subject to any other relevant requirements in Division 355 being satisfied).

79. Where an R&D entity is entitled to deduct an amount under:

•

section 355-205 (R&D expenditure);

•

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

•

section 355-315 (balancing adjustment for R&D assets) ;

•

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

•

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

•

section 355-525 (balancing adjustment for R&D partnership assets) ;

•

section 355-580 (CRC contributions).

then that amount is used in calculating the R&D entity's entitlement to a tax offset, which is determined by reference to the tables contained in section 355-100.

When notional deductions for R&D expenditure arise

80. A tax offset will be available in a year of income under Subdivision 355-C to the extent that an R&D entity:

•

incurs expenditure on one or more R&D activities (within the meaning of section 355-205) in the year of income;

•

is registered under section 27A of the IR&D Act 1986;

•

has notional deductions of at least $20,000 for that year of income; and

•

is entitled to those notional deductions, and is not precluded by any other provision of Division 355.

Whether the contributions are incurred 'on one or more *R&D activities'

81. Paragraph 355-205(1)(a) says that in order to deduct expenditure for an income year the expenditure needs to have been 'incurred on one or more *R&D activities'. The nature of the connection between the expenditure and the R&D activities expressed by the word 'on' in this context is governed by its place in the overall scheme of Division 355.

82. In Division 355, section 355-5 provides that the object of the Division concerns encouraging the conduct of particular R&D activities. Paragraph 355-205(1)(b) envisages that an R&D entity might incur expenditure within paragraph 355-205(1)(a), that is, incurring that expenditure 'on' an R&D activity, by incurring an amount to an 'associate' of theirs. That associate might be the entity which conducts the R&D activity, or it might, in turn, pay its employees, or an agent, or an independent contractor, to conduct this activity. The requirement that the expenditure be linked to the conduct of particular R&D activities is also found in subsection 355-210(1), concerning whether the expenditure coming within paragraph 355-205(1)(a) has also been incurred on activities which have been 'conducted for' the R&D entity (see, paragraph 355-210(1)(a)).

83. Also in Division 355, section 355-110 provides for the spreading of an R&D entity's deductions under section 355-205 or section 355-480, where the prepaid expenditure rules in Subdivision H of Division 3 of Part III of the ITAA 1936 apply. Section 355-110 thus contemplates that there may be expenditure which comes within paragraph 355-205(1)(a), where there is a lapse in time between when that expenditure is incurred on particular R&D activities, and when those activities begin to be conducted.

84. The fact that the expenditure in question might be incurred to an intermediary, or that there might be a gap in time between the expenditure being incurred and when the R&D activities begin, therefore will not in themselves, mean that the expenditure fails the requirement of needing to have been 'incurred on one or more R&D activities'. On the other hand, having regard to the object of Division 355, expenditure that is 'on' an activity which is not an R&D activity, where that expenditure is not integral to the conduct of any R&D activity, cannot be said to be sufficiently connected to the conduct of any R&D activity in a way which would bring it within paragraph 355-205(1)(a).

85. Factors to consider in determining whether this sufficient connection exists include:

•

the terms and conditions of any contract under which the expenditure in question has been incurred;

•

how those terms and conditions relate to the conduct of any R&D activities;

•

how many intermediaries there might be between the R&D entity and this conduct;

•

any lapse in time between when the expenditure is incurred and when the R&D activities begin to be conducted; and

•

whether the expenditure can reasonably be expected to produce results 'for' the R&D entity incurring it, from the R&D activities the expenditure is said to have been incurred on.

Registration under section 27A of the IR&D Act 1986

86. In accordance with subparagraph 355-205(1)(a)(i), an R&D entity's entitlement to a notional deduction in income year, will only arise if (amongst other requirements) it is registered (for the activities to which the expenditure relates) under section 27A of the IR&D Act 1986.

87. The class of entities to which this Ruling applies comprise companies registered in relation to specific R&D activities in accordance with the requirements of subparagraph 355-205(1)(a)(i). Therefore, this requirement is satisfied for the class of entities to which this Ruling applies.

Notional deductions of at least $20,000

88. The class of entities that this Ruling applies to comprises R&D entities with notional deductions for the purposes of calculating entitlement to a tax offset under section 355-100 of at least $20,000. Therefore, the third requirement is satisfied.

Preclusion by other provisions

89. Subsection 355-205(2) provides that a notional deduction arising under subsection 355-205(1) will be subject to the effect of:

•

section 355-255 (excluded expenditure);

•

Subdivision 355-F (integrity rules); and

•

subsection 355-580(3) (CRC contributions).

Excluded expenditure

90. Section 355-255 excludes certain types of expenditure from giving rise to a notional deduction under section 355-205, and subsequent inclusion in the calculation of any entitlement to a tax offset under section 355-100. The contributions to the ACALET Program do not result in Contributors having any of the excluded expenditure types in section 355-255, for the following reasons:

•

Contributors neither acquire, construct, alter, nor improve any building etcetera as a result of making contributions;

•

Contributors are not the holder of any Division 40 depreciating assets under section 40-40 as a result of their contributions to the ACALET Program, and therefore the expenditure is not for the acquisition or construction, nor does it otherwise form part of the cost of such depreciating assets;

•

contributions are not interest or an amount in the nature of interest incurred in the financing of R&D activities; and

•

the Contributor is not acquiring or acquiring the right to use any existing technology for the purposes of R&D activities.

Integrity rules

91. Subdivision 355-F sets out various rules which are intended to preserve the integrity and operation of the R&D tax incentive. Paragraph 3.155 of the Explanatory Memorandum that accompanied the Tax Laws Amendment (Research and Development) Bill 2010 (EM) explains that Subdivision 355-F was intended to preserve (in a corresponding way), the integrity provisions in the existing R&D provisions.

92. This Ruling does not consider whether any of the integrity rules identified in Subdivision 355-F operate in such a way as to either prevent (or alter) a notional deduction that would otherwise arise under subsection 355-205(1).

93. A Contributor who wants to ensure that Subdivision 355-F does not have application to their circumstances should apply for a private ruling.

CRC contributions

94. As identified in paragraph 63, contributions are not being paid to any entity that is part of the Commonwealth Government's CRC program.

R&D partnerships

95. Given that there is no partnership between Contributors; Subdivision 355-J does not apply to this Ruling.

Conditions for R&D activities

96. A Contributor's entitlement to a notional deduction under subsection 355-205(1) is subject to section 355-210 being satisfied. Section 355-210 provides specific conditions that must be satisfied before an activity will be regarded as an R&D activity. For the purposes of this Ruling those conditions are:

•

that the R&D activities that give rise to the expenditure are being conducted 'for' the R&D entity (paragraph 355-210(1)(a)); and

•

the R&D activities are not being conducted, to a significant extent, for one or more other entities not covered by any paragraph of subsection 355-210(1).

97. Whether R&D activities are to be carried out 'for' a Contributor as required by paragraph 355-210(1)(a), and not 'to a significant extent' for any other persons besides the Contributors, as provided by subsection 355-210(2), is considered in paragraphs 98 to 145 of this Ruling.

R&D activities conducted 'for' the R&D entity and not 'to a significant extent' for other entities

98. Entitlement to a notional deduction under section 355-205 for the payment of levies to ACALET will only arise if that expenditure is incurred on R&D activities, and those R&D activities are conducted 'for' the R&D entity. Further, the R&D activities which give rise to any notional deduction under section 355-205 must not be 'conducted, to a significant extent' for any other entity which does not satisfy the qualifying condition in paragraph 355-210(1)(a).^[2]

99. In explaining when expenditure on R&D will give rise to a notional deduction, the EM explains (at paragraphs 3.52 - 3.55):

Generally, an R&D entity is only entitled to a tax deduction in relation to R&D activities conducted for the entity (whether by the R&D entity for itself or by another entity for it). Also, an entity cannot deduct its expenditure on R&D activities if it conducts those activities to a significant extent for another entity.

This retains a key rule from the existing law commonly known as the 'on own behalf' rule. This rule is intended to limit eligibility for a notional R&D deduction to where an R&D entity is the major benefactor from the expenditure it incurs on the R&D activities. In certain situations, the rule also prevents duplication of claims by different R&D entities.

Determining the major benefactor of expenditure on R&D activities involves examining the extent to which R&D activities are carried out for the R&D entity compared to the extent to which they are carried out for any other entity. This is tested by weighing up three key criteria, namely who:

•

'effectively owns' the know-how, intellectual property or other similar results arising from the R&D entity's expenditure on the R&D activities;

•

has appropriate control over the conduct of the R&D activities; and

•

bears the financial burden of carrying out the R&D activities.

In short, the question of whether an R&D activity is conducted for an R&D entity is a question of fact, determined by whether the activity is conducted in substance to provide the majority of knowledge benefits resulting from the activity, such as access to intellectual property, to this entity.

Whether an R&D entity has effective ownership involves reviewing all the circumstances surrounding the conduct of the relevant activities and the ownership and control of, and/or ability to utilise, the intellectual property or similar results obtained from the expenditure on the R&D activities.

100. These three key criteria apply then to two of the conditions in section 355-210. The first condition concerns whether, in a positive sense, the R&D activities in question have been conducted 'for' the R&D entity (paragraph 355-210(1)(a)). The second concerns whether, in a negative sense, those R&D activities have been conducted 'to a significant extent, 'for one or more other entities not covered by any paragraph of subsection (1)' (subsection 355-210(2)). Applying these key criteria to a particular case requires weighing them up against the relevant facts and circumstances of that case.

Effective ownership

101. A company effectively owning results of the relevant R&D activities is the first identifying criterion in determining whether the R&D activities are being carried out for that company. However, it is recognised that this does not necessarily require that the company must be the proprietor of a piece of IP, as formal regimes of IP may not be available to protect the results. Further, it is possible that the formal owner of the IP may hold it on such terms that the company has all the advantages of ownership.

102. If a number of companies fund an R&D project together on their behalf, it is necessary that each must have a proper and effective interest in the R&D results.

103. ACALET uses levies paid by Contributors to fund the activities of the relevant projects which are undertaken in accordance with the relevant funding agreements. Any IP generated as a result of the relevant projects will not be legally owned by the Contributors. However, we are more concerned with effective ownership of the results of the R&D projects and whether the benefits obtained by the Contributors are such that they have an interest in the results of the relevant projects that is commensurate with their contributions.

104. The Contribution Deed between ACALET and the Contributor promises 'that the results of the research and development will be made available for the benefit of the operator to the extent possible under the terms of the agreements'.

105. In order to determine whether the Contributors' interests in the results of the R&D activities funded by their levies are commensurate with their contributions, it is necessary to consider the benefits that flow from the expenditure to the Contributors.

106. An examination of the benefits that Contributors are expected to gain and their individual interests in the results of the R&D activities conducted in connection with the scheme to which this Ruling applies, in comparison to their relevant expenditure, leads to the conclusion that the expenditure is commensurate with the benefits to be gained.

Control

107. The second identifying criterion is the nature and extent of control that the Contributors have over the R&D activities. Both the relevant funding agreements and the Contribution Deed result in the Contributors, as a group, having sufficient control of the R&D activities that they have contracted ACALET to provide. The Contribution Deed has set the parameters for the R&D to be undertaken and the underlying philosophies which ACALET is bound to follow. The Contributors have effective legal control, as they have the ability to compel ACALET to perform in accordance with the Contribution Deed. The manner in which the relevant projects are executed also supports the conclusion that the Contributors have sufficient control over the R&D activities.

Financial risk

108. The final identifying criterion is the degree of financial risk that Contributors are assuming when the R&D activities are undertaken. In accordance with the Contribution Deed, Contributors pay contributions which are calculated at a rate of up to $0.20 per tonne of coal produced over the term of the agreement. Payments are required on a quarterly basis. The Contribution Deed makes it clear that these contributions become the property of ACALET. These contributions cannot be refunded to the Contributors.

109. As Contributors pay non-refundable levies, they bear the financial risk associated with the R&D activities undertaken.

Summary

110. The terms of the Contribution Deed show that contributions will be applied exclusively for R&D, demonstration projects and also for management and administration expenses relating to the above. The relevant funding agreements specify that contributions can only be used for the purposes of the relevant project. Some of the contributions will therefore be directed towards R&D activities identified above.

111. Similar to other parties to the relevant projects, Contributors benefit from the results of the R&D activities, including receiving final reports. They also have the same rights in relation to the use of the relevant project's IP for internal purposes as other parties to that relevant project. This shows there is a practical link between the expenditure and the activities and the results to be produced from the activities.

112. Therefore, this illustrates that there is a sufficiently close connection between the portion of contributions used to fund the carrying on of R&D activities for the relevant project, such that this expenditure qualifies as being 'for' the activities identified as R&D activities. The extent to which this is so will depend on the fairness and reasonableness of the apportionment methodology used. As discussed in paragraph 84, the fact that payments are made to an intermediary does not preclude those payments from being on particular R&D activities.

113. An examination of the benefits that Contributors are expected to gain and their individual interests in the results of the R&D activities conducted in connection with the scheme to which this Ruling applies, in comparison to their relevant expenditure, leads to the conclusion that the expenditure is commensurate with the benefits to be gained.

114. Contributions incurred by Contributors to ACALET are expenditures on conducting R&D activities 'for' them, for the purposes of determining whether the Contributors are entitled to deduct amounts under section 355-205. Subsection 355-210(2) will not preclude any entitlement to a notional deduction on the basis that the R&D activity is being conducted to a significant extent for another entity, which itself does not satisfy section 355-210.

Subdivision 355-G - Clawback

115. Section 355-435 requires that an entity pay extra income tax when the requirements of section 355-440 and section 355-445 are met. The condition identified in section 355-440 requires that the entity receive (or becomes entitled to receive) a recoupment from:

•

an Australian government agency; or

•

an STB (as defined in Division 1AB of Part III of the ITAA 1936)

otherwise than under the CRC program.

116. Under section 355-445, the entitlement to a recoupment referred to in paragraph 115 must then be:

•

received during an income year (referred to as the trigger year); and

•

be incurred on or in relation to certain activities; or

•

require that expenditure (referred to as project expenditure), to have been or to be incurred on certain activities.

117. The Commonwealth has agreed to provide grant funding for all of the projects which are identified in this Ruling. However, both ACALET and the Commonwealth's funds can only be utilised for the relevant projects in accordance with the terms of the relevant funding agreements. The Commonwealth funding cannot be utilised or returned to any Contributor.

118. Whilst the relevant entity which incurs the expenditure referred to in section 355-445 will be different depending upon the relevant project, ACALET will not be the entity incurring that expenditure.

119. Any receipt of the Commonwealth funding by a Contributor in relation to the relevant projects is outside the scope of this Ruling. If a Contributor in this position wants to know whether Subdivision 355-G applies to them they should apply for a private ruling.

Section 8-1 - general deduction

Entitlement to a deduction for payments made under the Contribution Deed which are not payments that can be notionally deducted under section 355-205

120. To the extent that a payment made by a Contributor is not expenditure which can be notionally deducted under section 305-205, it may nevertheless be deductible under section 8-1. To be entitled to a deduction under section 8-1, a Contributor will need to satisfy subsection 8-1(1), and also not be precluded by any part of subsection 8-1(2).

121. Generally, this means that the payment will need to be:

•

capable of being characterised as a 'working or operating expense' of the business of the Contributor; and

•

necessarily incurred in carrying on the business of the Contributor.

Taxation Ruling TR 95/1^[3]

122. Taxation Ruling TR 95/1 considers whether advertising costs associated with opposing legislation will be a deductible expense. TR 95/1 was issued as a result of the decision in Federal Commissioner of Taxation v. Rothmans of Pall Mall (Aust) Ltd (1992) 37 FCR 582; 92 ATC 4508; (1992) 23 ATR 620 (Rothmans).

123. The decision in Rothmans provides some assistance in determining a Contributor's entitlement to a deduction under the scheme set out in this Ruling. Rothmans concerned a claim for a deduction by a member of the Tobacco Institute of Australia (the Institute). That member claimed their contribution to the Institute as a deduction from their assessable income. At paragraph 10 of TR 95/1, the Commissioner notes that:

The Court decided that the nature of the expenditure incurred by the company was, in the present commercial environment, an ongoing part of the circumstances in which companies carry on business. Accordingly, it was incidental to the carrying on of its business and did not involve the acquisition of an enduring asset. Lockhart J relied upon the decisions of the High Court in FC of T v. Snowden & Willson Pty Ltd (1958) 99 CLR 431 and of the Federal Court in Magna Alloys and Research Pty Ltd v. FC of T 80 ATC 4542; (1980) 11 ATR 276. His Honour found that the company was not seeking to maintain or preserve an existing capital asset by paying the levy to the Tobacco Institute. [emphasis added]

124. The principle established in Rothmans can be extended to include any portion of the levy payment (that is not eligible to be notionally deducted under section 355-205), which can be properly characterised as being incidental to the Contributor's business.

125. Where a Contributor makes a payment to ACALET, which enables it to promote its involvement with the relevant projects, it will be appropriate to characterise a portion of that payment as being in the nature of a marketing expense. The contributions are regular payments that do not produce any enduring benefit or advantage to the Contributors, but rather are intended to assist them in marketing their product.

126. Accordingly, in these circumstances, the payment will be deductible under subsection 8-1(1), and will not be precluded by any part of subsection 8-1(2).

Prepayments

127. The timing of any entitlement to a tax offset available under section 355-100, or a deduction under section 8-1 can be affected by the prepayment rules. Section 82KZMA of the ITAA 1936 sets the amount and timing of deductions for expenditure that a taxpayer incurs in a year of income (the expenditure year), if:

•

apart from those sections, a deduction under section 8-1, or section 355-205 (R&D expenditure) or section 355-480 (earlier year associate R&D expenditure), in respect of the expenditure, would be allowable from the Contributor's assessable income; and

•

the requirements in subsections 82KZMA(2) to (5) of the ITAA 1936 are met.

128. As discussed above, the requirements of section 355-205 (R&D expenditure) will be met for expenditure incurred on R&D activities, and those for section 8-1 will be met for any remaining expenditure incurred by Contributors to ACALET under the Contribution Deed. Whether the requirements of subsections 82KZMA(2) to (5) of the ITAA 1936 are satisfied also needs to be considered.

Whether subsections 82KZMA(2) to (5) are satisfied

129. Subsections 82KZMA(2) to (5) of the ITAA 1936 are satisfied for the reasons outlined below:

•

subsections 82KZMA(2) will be satisfied irrespective of whether the Contributors are carrying on a business or not;^[4]

•

paragraph 82KZMA(3)(a) will be satisfied irrespective of whether the expenditure is incurred in carrying on a business or otherwise than in carrying on a business;

•

the expenditure is incurred under an agreement as required by paragraph 82KZMA(3)(b);

•

for reasons discussed in paragraph 125 of this Ruling, the expenditure is not capital in nature, and therefore is not excluded expenditure^[5] as required by subsection 82KZMA(4). Further, none of the other excluded expenditure categories apply to the contributions made by the Contributors; and

•

in accordance with subsection 82KZMA(5), the expenditure is not a pre-RBT obligation.^[6]

130. Under paragraph 82KZMA(3)(c), the expenditure must also be in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year. The expenditure in question is, and will continue to be, incurred on an ongoing basis over the course of several years. The application of the expenditure and the means by which it delivers benefits to the Contributors depends on the complex interaction between several agreements, none of which precisely prescribe when various activities are to start being done, and when they are to stop being done.

131. The substance of these agreements however, is that the expenditure will typically relate to activities to be carried out at some future time, on the basis that relevant supervisory body requires funds in advance in order to see that the activities which are the subject of the relevant project are begun.

132. In respect of expenditure incurred over any one year it will generally not be possible to conclude therefore that it has all been incurred in return for doing things (the activities) that are all to be completed by the end of that year. Consistent with the proposition that contributions will be applied progressively over the life of the relevant project to carry out budgeted activities on behalf of the Contributors is the notion that each contribution is intended to fund only so much of these activities at any one time.

133. Accordingly, the condition in paragraph 82KZMA(3)(c) will also be satisfied. Identification of when the various activities are to start and stop is best done by reference to the underlying planning and budgetary documentation that guides the relevant project, and its supervisory body's actions. Determination of these stop and start times will necessarily, in the circumstances, be one of reasonable estimation, rather than something that occurs with absolute precision.

Amount and timing of deduction

134. In accordance with section 82KZMD(2) of the ITAA 1936, for each year of income containing all or part of the eligible service period for the expenditure, the taxpayer may deduct the amount under section 8-1, or notionally deduct the amount under section 355-205 by applying this formula:

135. The eligible service period in relation to an amount of expenditure incurred under an agreement, means the period from the beginning of:

(a)

the day or the first day on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted as the case may be to commence being done; or

(b)

if the expenditure is incurred on a later date - the day on which the expenditure is incurred;

until the end of:

(c)

the day, or the last day, on which the thing to be done under the agreement in return for the amount of expenditure is required or permitted as the case may be to cease being done; or

(d)

if that day or the last day ends more than 10 years after the beginning of the period - 10 years after the beginning of the period.

136. Relevant to the task of determining the eligible service period are the Contribution Deed, the relevant funding agreement, and any other agreements entered into for the purposes of the relevant projects. In addition, financial reports, annual reports and annual budgets provided to ACALET for the purposes of the relevant project will also be of assistance.

137. There is an inherent or expected degree of imprecision when applying the calculation required under section 82KZMD. As discussed in paragraph 133, with reference to the relevant project's underlying planning and budgetary documentation which guide the relevant supervisory body's actions, it should be possible to calculate the amount identified in section 82KZMD with reasonable estimation.

138. Analysis of the various relevant projects spending to date in conjunction with the budget details for the planned spending should provide a suitable indicator as to how much of the contributions paid to date have actually been applied to the activities of the relevant project, and what the typical 'lag' is in this respect, so as to produce a broad, but still reasonable reflection of the extent to which each quarter's sum of contributions relates to activities to be performed in the future.

139. Note that in circumstances in which the last day of the eligible service period would exceed 10 years after the eligible period's start date, the eligible service period is limited to a period of 10 years. Refer to the definition of 'eligible service period' in subsection 83KZL(1) of the ITAA 1936.

Appendix 2 - Detailed contents list

140. The following is a detailed contents list for this Ruling:

Not previously issued as a draft

References

ATO references:
NO 1-3L981S7

Related Rulings/Determinations:

TR 95/1
TR 2006/10
CR 2010/44
CR 2009/45
CR 2012/82

Subject References:
on own behalf
research and development tax offsets

Legislative References:
ITAA 1936 82KZL
ITAA 1936 82KZL(1)
ITAA 1936 82KZMA(2)
ITAA 1936 82KZMA(3)
ITAA 1936 82KZMA(3)(a)
ITAA 1936 82KZMA(3)(b)
ITAA 1936 82KZMA(3)(c)
ITAA 1936 82KZMA(4)
ITAA 1936 82KZMA(5)
ITAA 1936 82KZMD
ITAA 1936 82KZMD(2)
ITAA 1997 8-1
ITAA 1997 8-1(1)
ITAA 1997 8-1(2)
ITAA 1997 Div 40
ITAA 1997 40-40
ITAA 1997 328-110
ITAA 1997 Div 355
ITAA 1997 Subdiv 355-B
ITAA 1997 355-20
ITAA 1997 355-25
ITAA 1997 355-30
ITAA 1997 355-35
ITAA 1997 Subdiv 355-C
ITAA 1997 355-100
ITAA 1997 355-100(1)(a)
ITAA 1997 355-100(1)(b)
ITAA 1997 355-100(1)(c)
ITAA 1997 355-100(1)(d)
ITAA 1997 355-100(1)(e)
ITAA 1997 355-100(1)(f)
ITAA 1997 355-100(1)(g)
ITAA 1997 Subdiv 355-D
ITAA 1997 355-205
ITAA 1997 355-205(1)
ITAA 1997 355-205(1)(a)
ITAA 1997 355-205(1)(a)(i)
ITAA 1997 355-205(1)(b)
ITAA 1997 355-210
ITAA 1997 355-210(1)
ITAA 1997 355-210(1)(a)
ITAA 1997 355-210(2)
ITAA 1997 Subdiv 355-G
ITAA 1997 355-305
ITAA 1997 355-315
ITAA 1997 355-480
ITAA 1997 Subdiv 355-J
ITAA 1997 355-520
ITAA 1997 355-525
ITAA 1997 355-580
ITAA 1997 355-580(3)
TAA 1953
Copyright Act 1968
Industry Research and Development Act 1986 27A
Industry Research and Development Act 1986 Div 4

Case References:
Federal Commissioner of Taxation v. Rothmans of Pall Mall (Aust) Ltd
(1992) 37 FCR 582
92 ATC 4508
(1992) 23 ATR 620

FC of T v. Snowden & Willson Pty Ltd
(1958) 99 CLR 431
Magna Alloys and Research Pty Ltd v. FC of T
80 ATC 4542
(1980) 11 ATR 276

Other References:
Tax Laws Amendment (Research and Development) Bill 2010 Explanatory Memorandum