Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p5
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 5/18)
Character Range: 5192720–5195637

Step 1. For each grouped entity, work out the sum of the amounts derived during the income year, or an earlier income year, by the grouped entity for goods or services relating to one or more of the *R&D activities while:

                (a) the grouped entity was *connected with the *R&D entity; or
                (b) the grouped entity was an *affiliate of the R&D entity or the R&D entity was an affiliate of the grouped entity.

           Step 2. From the sum of those amounts, subtract the actual cost to each grouped entity of providing the goods or services that correspond to those amounts.

If R&D entity has deductions for both R&D expenditure and earlier year associate R&D expenditure
 (3) However, if the *R&D entity can deduct amounts under both sections 355‑205 and 355‑480 for the income year, those amounts are reduced as follows:
 (a) apply the reduction amount to reduce the amount otherwise deductible under section 355‑205 (but not below zero); and
 (b) then apply any remainder of the reduction amount to reduce the amount otherwise deductible under section 355‑480 (but not below zero).

Disregard mark‑ups already taken into account
 (4) For the purposes of step 1 of the method statement in subsection (2), disregard any of the amounts from that step that have already been taken into account under this section for the *R&D entity and the *R&D activities for an earlier income year.

Subdivision 355‑G—Clawback of R&D recoupments, feedstock adjustments and balancing adjustments

Guide to Subdivision 355‑G

355‑430  What this Subdivision is about

      An amount is included in an R&D entity's assessable income if:
             (a) the R&D entity receives a recoupment from government of expenditure on R&D activities for which it has obtained tax offsets under this Division; or
             (b) the R&D entity can deduct under this Division expenditure on goods, materials or energy used during R&D activities to produce marketable products or products applied to the R&D entity's own use; or
             (c) a balancing adjustment event happens for an asset held by the R&D entity (or an R&D partnership in which the R&D entity is a partner) for which tax offsets have been obtained under this Division and for which an amount is otherwise included in the R&D entity's (or R&D partnership's) assessable income.

Table of sections

Operative provisions
355‑435 When this Subdivision applies
355‑440 R&D recoupments
355‑445 Feedstock adjustments
355‑446 Balancing adjustments for assets only used for R&D activities
355‑447 Balancing adjustments for assets partially used for R&D activities
355‑448 Balancing adjustments for R&D partnership assets only used for R&D activities
355‑449 Balancing adjustments for R&D partnership assets partially used for R&D activities
355‑450 Amount to be included in assessable income

Operative provisions

355‑435  When this Subdivision applies