Document ID: chunk:federal_register_of_legislation:C2014C00703:clause:1_1:p1
Version: federal_register_of_legislation:C2014C00703
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 1/3)
Character Range: 7440–10397

1  After Division 345
Insert:

Division 355—Research and Development

Table of Subdivisions
 Guide to Division 355
355‑A Object
355‑B Meaning of R&D activities and other terms
355‑C Entitlement to tax offset
355‑D Notional deductions for R&D expenditure
355‑E Notional deductions for decline in value of depreciating assets used for R&D activities
355‑F Integrity Rules
355‑G Clawback of R&D recoupments
355‑H Feedstock adjustments
355‑I Application to earlier income year R&D expenditure incurred to associates
355‑J Application to R&D partnerships
355‑K Application to Cooperative Research Centres
355‑W Other matters

Guide to Division 355

355‑1  What this Division is about

      An R&D entity may be entitled to a tax offset for R&D activities. The tax offset may be a refundable tax offset if the R&D entity's aggregated turnover is less than $20 million.
      To be entitled to the tax offset, the R&D entity needs one or more notional deductions under this Division.
      There are 2 main kinds of notional deductions. One is for expenditure on R&D activities. The other is for the decline in value of tangible depreciating assets used for R&D activities.
Note: All of these notional deductions require the R&D entity to be registered for the R&D activities under Part III of the Industry Research and Development Act 1986.

Subdivision 355‑A—Object

Table of sections
355‑5 Object

355‑5  Object
 (1) The object of this Division is to encourage industry to conduct research and development activities that might otherwise not be conducted because of an uncertain return from the activities, in cases where the knowledge gained is likely to benefit the wider Australian economy.
 (2) This object is to be achieved by providing a tax incentive for industry to conduct, in a scientific way, experimental activities for the purpose of generating new knowledge or information in either a general or applied form (including new knowledge in the form of new or improved materials, products, devices, processes or services).

Subdivision 355‑B—Meaning of R&D activities and other terms

Table of sections
355‑20 R&D activities
355‑25 Core R&D activities
355‑30 Supporting R&D activities
355‑35 R&D entities

355‑20  R&D activities
  R&D activities are *core R&D activities or *supporting R&D activities.

355‑25  Core R&D activities
 (1) Core R&D activities are experimental activities:
 (a) whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:
 (i) is based on principles of established science; and
 (ii) proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and
 (b) that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).
 (2) However, none