Document ID: chunk:federal_register_of_legislation:C2014C00703:clause:1_2:p2
Version: federal_register_of_legislation:C2014C00703
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 2/11)
Character Range: 34214–36923

applies in a modified way if the entity also has deductions for the asset under former section 73BA or 73BH of the Income Tax Assessment Act 1936 (see section 355‑320 of the Income Tax (Transitional Provisions) Act 1997).
Note 2: Section 40‑292 applies if the entity can deduct an amount under section 40‑25, as that section applies apart from this Division and former section 73BC of the Income Tax Assessment Act 1936.

Notional deduction
 (2) If the *R&D entity could deduct for the event year an amount under subsection 40‑285(2) for the asset and the event if Division 40 applied as described in paragraph (1)(e), the R&D entity can deduct that amount for the event year.

Amount to be included in assessable income
 (3) If an amount (the section 40‑285 amount) would be included in the *R&D entity's assessable income for the event year under subsection 40‑285(1) for the asset and the event if Division 40 applied as described in paragraph (1)(e), the sum of that amount and the following amount is included in the R&D entity's assessable income for the event year:
where:
adjusted section 40‑285 amount means so much of the section 40‑285 amount as does not exceed the total decline in value.
total decline in value means the asset's *cost, less its *adjustable value, worked out under Division 40 as it applies as described in paragraph (1)(e).

Subdivision 355‑F—Integrity Rules

Table of sections
355‑400 Expenditure incurred while not at arm's length
355‑405 Expenditure not at risk
355‑410 Disposal of R&D results
355‑415 Reducing deductions to reflect mark‑ups within groups

355‑400  Expenditure incurred while not at arm's length
  If:
 (a) an *R&D entity incurs expenditure to another entity on all or part of an *R&D activity; and
 (b) either:
 (i) when the R&D entity incurs the expenditure, the R&D entity and the other entity do not deal with each other at *arm's length; or
 (ii) the other entity is the R&D entity's *associate; and
 (c) the expenditure exceeds the *market value of the relevant R&D activity or part (as appropriate);
for the purposes of this Division, the R&D entity is treated as if the amount of expenditure it incurred on the relevant R&D activity or part (as appropriate) were equal to that market value.
Note 1: For the purposes of a deduction under section 355‑305 or 355‑520 for an asset's decline in value, the arms' length rules in Division 40 apply as part of the notional application of that Division under that section.
Note 2: In the application of Division 13 of Part III of the Income Tax Assessment Act 1936 (about international transfer‑pricing arrangements), this section is disregarded (see subsection 136AB(2) of that Act).

355‑405  Expenditure not