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 2/6)
Character Range: 18996–21899

year associate R&D expenditure.

Subdivision 355‑D—Notional deductions for R&D expenditure

Table of sections
355‑200 What this Subdivision is about
355‑205 When notional deductions for R&D expenditure arise
355‑210 Conditions for R&D activities
355‑215 R&D activities conducted by a permanent establishment for other parts of the body corporate
355‑220 R&D activities conducted for a foreign entity
355‑225 Expenditure that cannot be notionally deducted

355‑200  What this Subdivision is about

      An R&D entity can notionally deduct its expenditure on registered R&D activities for which certain conditions are met.
      There are special conditions for R&D activities conducted for foreign residents.

355‑205  When notional deductions for R&D expenditure arise
 (1) An *R&D entity can deduct for an income year (the present year) expenditure it incurs during that year to the extent that the expenditure:
 (a) is incurred on one or more *R&D activities:
 (i) for which the R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for an income year; and
 (ii) that are activities to which section 355‑210 (conditions for R&D activities) applies; and
 (b) if the expenditure is incurred to the R&D entity's *associate—is paid to that associate during the present year.
Note 1: If the matters in subparagraphs (a)(i) and (ii) are not satisfied until a later income year, the R&D entity will need to wait until then before it can deduct the expenditure for the present year.
Note 2: 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 3: The entity may also be able to deduct expenditure incurred to an associate in an earlier income year (see section 355‑480).
Note 4: 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 (Transitional Provisions) Act 1997).
 (2) This section has effect subject to section 355‑225 (excluded expenditure), Subdivision 355‑F (integrity rules) and subsection 355‑580(3) (CRC contributions).

355‑210  Conditions for R&D activities
 (1) An *R&D activity covered by one or more of the following paragraphs is an activity to which this section applies:
 (a) the R&D activity is conducted for the *R&D entity solely within Australia or an external Territory;
 (b) if the R&D entity is a body corporate carrying on business through a permanent establishment (as described in subsection 355‑35(2))—the R&D activity is conducted:
 (i) for the body corporate; but
 (ii) not for the purposes of that permanent establishment;
  and the conditions in section 355‑215 (activities conducted for a body corporate by its permanent establishment) are