Private ruling: Cooperative research centres projects program
Date of advice: 21 April 2026
Published: 6 July 2026
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the Cooperative Research Centres Projects Program (CRC-P) grant payments subject to R&D offset clawback provisions under Subdivision 355-G of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Is the R&D expenditure under the CRC-P excluded from the notional deductions for R&D expenditureunder subsection 355-580(2) of the ITAA 1997? | A2: Yes.

Relevant facts and circumstances: 1. Company A and Company B (you) are a consolidated group for tax purposes. 2. Company B entered into a Commonwealth Standard Grant Agreement with Department of Industry, Science and Resources (DISR) to receive a grant as part of the Cooperative Research Centres Projects. 3. You provided with details on the amount of money Company B will receive and the period of the payments. 4. You provided us with details of the project date. 5. Company B entered into a partners agreement with Entity C and Entity D for the CRC-P for the specified period. Under the partners agreement Company B agreed: • Company A would make contributions in cash, cash-staff and in-kind to the project. • Company B to ensure that the grant and partner contributions are used for (and only) for the purpose of undertaking the project consistent with the activity budget in the grant agreement. 6. You provided us with details for the current income year on the estimate for the grant money and the R&D eligible expenditure (including Amount A, being expenditure related to the grant payments). 7. The expenditure paid from the grant was paid after you received the grant money. Assumption The grant and partner contributions have been used only for the purpose of undertaking the project consistent with the activity budget in the grant agreement.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 355-G | Income Tax Assessment Act 1997 section 355-40 | Income Tax Assessment Act 1997 paragraph 355-100(1)(g) | Income Tax Assessment Act 1997 section 355-305 | Income Tax Assessment Act 1997 section 355-580 | Income Tax Assessment Act 1997 subsection 355-580(1) | Income Tax Assessment Act 1997 subsection 355-580(2) | Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision: Summary: The CRC-P falls within the meaning of 'CRC program', the amount that you receive (or entitled to receive), is not an amount that can be a R&D recoupment for the purposes of section 355-440, therefore the grants are excluded from the clawback rules in Subdivision 355-G. | Detailed Reasoning - CRC-P and it being a 'CRC program': 'CRC program' is a defined term provided by subsection 995-1(1) as: CRC program means the program administered by the Commonwealth known as the Cooperative Research Centres Program. Section 15AA of the Acts Interpretation Act 1901 states: In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation. G.T.K. Trading Pty Ltd v Export Development Grants Board [1981] FCA 226 (GTK Trading) has been praised as a good example of the application of section 15AA of the Acts Interpretation Act 1901 in that the 'construction of the Act was adopted by the Court with an eye aimed at clearly promoting the purpose and object underlying the section'. The Full Federal Court in Australian Competition and Consumer Commission v P T Garuda Indonesia Ltd cited GTK Trading as indicating that a strict or narrow meaning of a term 'need not be adopted if the proper construction of the relevant statutory provision suggests otherwise'. The question of whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law. The meaning of 'CRC program' was inserted into section 995-1 by Tax Laws Amendment (Research and Development) Act 2011, the Act which inserted Division 355 - Research and Development. Paragraph 3.180 of the Explanatory Memorandum to the Tax Laws Amendment (Research and Development) Bill 2010 explains the Cooperative Research Centres Program: The Cooperative Research Centre program is a program administered by the Commonwealth that links researchers with industry to focus R & D efforts on addressing major challenges and progressing towards utilisation and commercialisation. A Cooperative Research Centre is an incorporated or unincorporated organisation, formed through medium to long-term collaborative partnerships between publicly funded researchers and end users. Cooperative Research Centres must comprise at least one Australian end-user (either from the private, public or community sector) and at least one Australian higher education institution (or research institute affiliated with a university). The words 'known as' take their meaning from the verb 'know'. The Macquarie Dictionary meaning of 'know' includes the following example of its use: 3. to be cognisant or aware of; to be acquainted with (a thing, place, person, etc.) as by sight, experience, or report. We consider the term 'Cooperative Research Centres Program' has an industry or organisational meaning given by the relevant Commonwealth authority that administers the program. This in turn influences how stakeholders, for example, the participants of the program, know the program to be. Additionally, the scope of what is, or is not, a 'CRC Program' is not fixed by reference to what industry or organisational meaning that expression had in 2011 when that expression was first inserted into the ITAA 1997. We are of the opinion that the wide-open textured words used in subsection 995-1(1) as it applies to 'CRC Program' is always speaking so that the essential meaning is applied: taking into account changes in our understanding of the natural world, technological changes, changes in social standards and... changes in social attitudes'... [including] changes in the law since the legislation was first enacted. Inserted into the IRDA by the Industry Research and Development Amendment (Innovation and Science Australia) Act 2016 , subsection 33(1) of the IRDA provides that: The Minister may, by legislative instrument, prescribe one or more programs in relation to industry, innovation, science or research, including in relation to the expenditure of Commonwealth money under such programs. Notably, the same amending Act made consequential amendments to the ITAA 1997, however those amendments were limited to substituting 'Innovation and Science Australia' for 'Innovation Australia'. That is, relevantly, there was no amendment to the meaning of 'CRC program' in subsection 995-1(1). At the time, Division 355 was first enacted there was only a singular program of funding for which the CRC Program was focused. These, 'traditional CRCs' were focused to support medium to long-term industry-led collaborations. Presently however, in response to the recommendations made in the Miles Report, there are 2 programs prescribed by legislative instrument that have or make reference to, on the face of the respective legislative instrument, CRC; namely: a. Instrument 1: that which defines the 'program' in section 4 of the Industry Research and Development (Cooperative Research Centres Program) Instrument 2019 as 'Cooperative Research Centres Program'; and b. Instrument 2: that which defines the 'program' in section 5 of the Industry Research and Development (Cooperative Research Centres Projects Program) Instrument 2018 as 'Cooperative Research Centres Projects Program'. The former is intended to govern the traditional CRCs, and the latter, previously non-government supported short-term industry-led collaborations. It is accepted that project contributions and funding made in relation to traditional CRCs fall under 'CRC Programs' within the meaning of subsection 995-1(1), but put simply, the present issue is whether the insertion of the word 'Projects' in Instrument 2 has the effect of excluding short-term industry-led collaborations from the ambit of subsection 995-1(1) and the concessionary benefits that might be available to a CRC-P participant. The definition of 'CRC program' in subsection 995-1(1) is not strict in its reference to the 'Cooperative Research Centres Program'. That is, unlike, for example, the present meaning of 'managed investment scheme' or 'life insurance policy' that are specific in their reference to the Corporations Act 2001 and Life Insurance Act 1995 respectively, there is no reference in the definition of 'CRC program' to specific Commonwealth or state, legislation or instrument that itself limits what is, or is not a 'Cooperative Research Centres Program'. Instead, as noted above, we believe 'CRC Program' as defined is flexible and always speaking. It is appreciated that there might be an argument that suggests use of the words 'the program administered' implies that the legislature intended the existence of only a singular program to be covered by 'CRC program', such that only traditional CRCs and not short-term CRCs (that is, CRC-Ps) would be within the definition. However, though this argument would have additional weight if indeed there were 2 separate programs, in our opinion on review, traditional CRCs and CRC-Ps are not intended to be, nor referred to as being, separate programs. Rather, consistent with Recommendation 3 of the Miles Report, there is a singular CRC program of which there are 2 streams of activity. The Miles Report further stated: ... A new stream of activity, CRC projects (CRC-Ps), supporting industry focused research projects, with shorter timeframes and smaller budgets should be introduced. The funding for this new activity should come from the existing programme allocation. Consistent with the Miles Report recommendations, both CRC streams are indeed funded from the same budget allocation. By no means exhaustive of all DISR or IISA guidance or guidelines we draw attention to the following: a. AusIndustry explains the CRC Program on its external website: CRC Grants are part of the CRC Program. The CRC Program supports industry, research and the community in 2 ways: • CRC Grants - support medium to long term industry-led collaborative research, for up to 10 years. • CRC Projects (CRC-P) grants - support short term, industry-led collaborative research, for up to 3 years. CRC Grants provide funding for collaborations to solve industry identified problems. b. DISR in describing the grant program in its 'CRC Projects Grants Opportunity Guidelines': The CRC Program (the program) supports industry-led collaborations between industry, researchers and the community. The program is a proven model for linking researchers with industry to focus on research and development towards use and commercialisation ... The program consists of two elements: • CRC Grants to support medium to long term, industry-led collaborations; and • CRC-Ps support short term, industry-led collaborative research. c. Cooperative Research Australia - a representative industry body provides the following explanation of the Cooperative Research Centres Program: The Cooperative Research Centres (CRC) Program is an Australian Government initiative that was established in 1990 and funds industry-led collaborations between industry, researchers and end users. The CRC Program links researchers with industry and government with a focus towards research application, and offers support through two elements: • Cooperative Research Centre (CRC) grants - supporting medium to long term industry-led collaborations, up to 10 years. • Cooperative Research Centres Projects (CRC-P) grants - supporting short term, industry-led collaborative research, up to 3 years. Innovation and Science Australia and its CRC Advisory Committee provide strategic oversight of the CRC Program. It is clear from the small selection of above excerpts that the CRC program currently comprises 2 elements or streams in the form of grants. In summary, when considering the principles of statutory construction, there is no basis to support a narrow meaning of the term 'CRC program'. We consider the better view is to have regard to what the CRC program is 'known as' by the administers of the program and its participants, being a reference to the overall CRC program, that is presently funded to support both medium to long-term industry-led collaborations and short-term industry-led collaborations. | Detailed Reasoning - CRC-P and R&D recoupments: The R&D clawback rules are contained in Subdivision 355-G. Section 355-440 provides what constitutes R&D recoupments. It states: (1) The R&D entity has an amount under this section if: (a) the entity, or another entity mentioned in subsection (5), receives of becomes entitled to receive a recoupment from either of the following (otherwise than under the CRC program): (i) an Australian government agency; (ii) an STB (within the meaning of Division 1AB of Part III of the Income Tax Assessment Act 1936) .... | Detailed Reasoning - Conclusion: Given that the CRC-P falls within the meaning of 'CRC program', the amount that you receive (or entitled to receive), is not an amount that can be a R&D recoupment for the purposes of section 355-440, therefore the grants are excluded from the clawback rules in Subdivision 355-G. | Detailed Reasoning - Question 2: Is the R&D expenditure under the CRC-P excluded from the notional deductions for R&D expenditureunder subsection 355-580(2) of the ITAA 1997? | Summary: The monetary contributions paid by you of Amount A, out of the Commonwealth funding (paid out of your CRC-P grant funding) then your national deduction is limited to the amount contributed from its own non-Commonwealth funded resources. Therefore, the payments of Amount A are excluded to deny a notional deduction under subsection 355-580(2). | Detailed Reasoning - Monetary contributions: Ordinarily, an R&D entity can claim a notional deduction for its R&D expenditure or an amount for the decline in value of a tangible depreciating asset used in R&D activities if it meets the requirements of section 355-205 or section 355-305 respectively. Paragraph 355-100(1)(g) however, operates differently, by providing an upfront entitlement to an R&D tax offset for monetary contributions (that is, the incurring or outlaying of cash) made to a CRC that meets the requirements of section 355-580, notwithstanding those funds may not be actually expended on eligible R&D activities until a later time. Section 355-580 provides a notional deduction for monetary contributions made by an R&D entity under the CRC program as follows: 355-580 (1) An R&D entity can deduct for an income year expenditure it incurs during that year to the extent that: (a) the expenditure is in the form of monetary contributions under the CRC program, and (b) the contributions have been or will be spent under the CRC program on one or more R&D activities for which the R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for an income year. Note 1: The R&D activities will need to be conducted during the income year the R&D entity is registered for those activities (see sections 27A and 27J of the Industry Research and Development Act 1986 ). Note 2: Expenditure incurred in income years starting on or after 1 July 2011 may be deductible for activities registered for income years starting before 1 July 2011 (see section 355-200 of the Income Tax (Transactional Provisions) Act 1997 ). (2) Subsection (1) does not apply to expenditure to the extent that it is incurred out of Commonwealth funding. A monetary contribution made by an R&D entity participant 'under' a CRC-P will be notionally deductible to that R&D entity participant where the R&D entity has registered the relevant R&D activities and that contribution will be spent under the program on those activities. The Commissioner is of the opinion that contributions are made 'under' a CRC-P if those contributions are made pursuant to the terms of relevant grant and partner's agreement. If the monetary contribution made by the R&D entity is paid (in full or partially) out of Commonwealth funding (for example, paid out of CRC-P grant funding that is directly received by the R&D entity from DISR) then the R&D entity's notional deduction is limited to that amount contributed from its own - non-Commonwealth funded - resources. | Detailed Reasoning - Non-monetary contributions: Non-monetary contributions by an R&D entity into a CRC-P are not notionally deductible under subsection 355-580(1), even if those contributions are made under the program and are on R&D activities that are registered by the R&D entity. However, non-monetary contributions provided by an R&D entity under a CRC-P - for example, the direct provision of personnel, facilities, goods, materials, and services - might nevertheless attract an R&D tax offset if that contribution is otherwise notionally deductible under Division 355. We have limited this private ruling to deductions paid out of CRC-P money (monetary contributions), therefore will not address non-monetary contributions. | Detailed Reasoning - Conclusion: The monetary contributions paid by you of Amount A was paid out of the CRC-P grant funding (Commonwealth funding). Your national deduction is limited to the amount contributed from your own non-Commonwealth funded resources. Therefore, the payments of Amount A are excluded to deny a notional deduction under subsection 355-580(2).

Reasons for decision: All legislative references in these reasons for decision are to the ITAA 1997 unless otherwise stated.