Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p6
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 6/7)
Character Range: 5178777–5181587

for interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) payable to an entity.
Note 1: Expenditure covered by paragraph (a) may be deductible under Division 43 (capital works).
Note 2: The decline in value of an asset covered by paragraph (b) may be notionally deductible under section 355‑305.
Note 3: Expenditure covered by paragraph (c) may be deductible under section 8‑1.

Expenditure on core technology
 (2) Sections 355‑205 (deductions for R&D expenditure) and 355‑480 (deductions for earlier year associate R&D expenditure) do not apply to expenditure incurred in acquiring, or in acquiring the right to use, technology wholly or partly for the purposes of one or more *R&D activities if:
 (a) a purpose of the R&D activities was or is:
 (i) to obtain new knowledge based on that technology; or
 (ii) to create new or improved materials, products, devices, processes, techniques or services to be based on that technology; or
 (b) the R&D activities were or are an extension, continuation, development or completion of the activities that produced that technology.

Subdivision 355‑E—Notional deductions etc. for decline in value of depreciating assets used for R&D activities

Table of sections
355‑300 What this Subdivision is about
355‑305 When notional deductions for decline in value arise
355‑310 Notional application of Division 40
355‑315 Balancing adjustments—assets only used for R&D activities

355‑300  What this Subdivision is about

      An R&D entity can notionally deduct the decline in value of a tangible depreciating asset used for R&D activities.
      If a balancing adjustment event later happens for the asset, the R&D entity may be able to actually deduct a further amount. Alternatively, an amount may be included in the R&D entity's assessable income.

355‑305  When notional deductions for decline in value arise
 (1) If:
 (a) an *R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for an income year (the present year) for one or more *R&D activities that are activities to which section 355‑210 (conditions for R&D activities) applies; and
 (b) while a tangible *depreciating asset is *held by the R&D entity during the present year, the asset is used for the purpose of conducting one or more of those R&D activities; and
 (c) the R&D entity could deduct an amount under section 40‑25 for the asset for the present year if Division 40 applied with the changes described in section 355‑310; and
 (d) the R&D entity cannot deduct an amount for the asset for:
 (i) an earlier income year under Subdivision 328‑D (capital allowances for small business entities); or
 (ii) an earlier income year under Division 40 (as that Division applies apart from this Division), in a case where section