Private ruling: Research and development entity and tax offset eligibility
Date of advice: 4 June 2024
Published: 15 July 2024
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are the R&D activities conducted for the entity in accordance with paragraph 355-210(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) and subsequently is the entity entitled to the R&D tax offset outlined in section 355-100 of the ITAA 1997? | A1: Yes. The entity is an R&D entity as defined in paragraph 355-35(1)(a) of the ITAA 1997. The entity is conducting registered R&D activities for itself as the R&D entity solely within Australia. The registered R&D activities are solely conducted by the entity. As the entity is an R&D entity that can deduct amounts for the income year under any or all of the following provisions of the ITAA 1997, section 355-205 (R&D expenditure), section 355-305 (decline in value of R&D assets), section 355-480 (earlier year associate R&D expenditure), section 355-520 (decline in value of R&D partnership assets), section 355-580 (CRC contributions), and as such they are entitled to the R&D tax offset outlined in section 355-100 of the ITAA 1997.

Relevant facts and circumstances: The entity is a duly registered Australian Company. The entity has lodged the required R&D tax incentive application with AusIndustry. The entity has registered the words relevant to their trademark and associated images with IP Australia. The objectives of the project are outlined in the AusIndustry application. The entity has estimated expenditure for the core R&D activity. The following eligible R&D expenditure would be included as a notional deduction: • Salary & Wages • Contractor Expenses • Associate Payments • Overhead Expenses • Feedstock Input In addition to the R&D activities, the entity separately operates a retail outlet under a franchise agreement. A solicitor's letter from the solicitors acting for the franchisor confirms that all intellectual property related the entity's R&D activities are solely owned by the entity and not the franchisor.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 355-35(1)(a) | Income Tax Assessment Act 1997 section 355-100 | Income Tax Assessment Act 1997 section 355-205 | Income Tax Assessment Act 1997 paragraph 355-210(1)(a) | Income Tax Assessment Act 1997 section 355-305 | Income Tax Assessment Act 1997 section 355-480 section 355-520 | Income Tax Assessment Act 1997 section 355-580