Private ruling: Non-refundable tax offset rate under section 355-100 ITAA 1997
Date of advice: 5 November 2018
Published: January 2019
Ruling period: 1 January 20XX to 31 December 20XX
Date scheme commenced: 1 January 20XX

Ruling: Q1: Is the Company entitled to a non-refundable tax offset equal to 40% of their eligible research and development (R&D) expenditure in their income year ended 31 December 20XX in lieu of 30 June 20XX? | A1: Yes.

Relevant facts and circumstances: The Company is an Australian private company that has an approved substituted accounting period (SAP) for income tax purposes of 1 January 20XX to 31 December 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 355-100

Reasons for decision: Summary: The non-refundable tax offset rate under items 2 or 3 of the table at subsection 355-100(1) is 40% for an eligible entity’s income year that begins 1 January 20XX and ends 31December 20XX. The current non-refundable tax offset rate of 38.5% under items 2 or 3 of the table at subsection 355-100(1) replaced the former rate of 40% in those table items pursuant to Schedule 22 of the Budget Savings (Omnibus) Act 2016 (assented to 16 September 2016). However, pursuant to item 5 of Schedule 22, the new rate applies in relation to assessments for income years commencing on or after 1 July 20XX. That means if an income year begins before 1 July 20XX, the former rates apply for that income year. Accordingly, where an entity has an approved substituted accounting period for income tax purposes that begins on 1 January each year, the non-refundable tax offset rate of 40% applies in relation to the income year commencing on 1 January 20XX and ending on 31 December 20XX.