Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 1/7)
Character Range: 5166212–5168854

2                                             Expenditure that the *R&D entity can deduct under section 355‑580 (CRC contributions) for the income year

If notional deductions exceed $150 million
 (3) Despite subsections (1) and (1A), if the total amount mentioned in subsection (1) exceeds $150 million, the *R&D entity is instead entitled to a *tax offset for the income year equal to the sum of:
 (a) the amount worked out in accordance with those subsections as if that amount were $150 million; and
 (b) the product of the excess and the R&D entity's *corporate tax rate for the income year.

355‑105  Deductions under this Division are notional only
 (1) An amount (the notional amount) that an *R&D entity can deduct under this Division is disregarded except for the purposes of:
 (a) working out whether the R&D entity is entitled under section 355‑100 to a *tax offset; and
 (b) a provision (of this Act or any other Act) that refers to an entitlement of the R&D entity under section 355‑100 to a tax offset; and
 (c) a provision (of this Act or any other Act) that:
 (i) prevents some or all of the notional amount from being deducted; or
 (ii) changes the income year for which some or all of the notional amount can be deducted; and
Note: Examples are Divisions 26 and 27 of this Act, Subdivision H of Division 3 of Part III of the Income Tax Assessment Act 1936 and Part IVA of that Act.
 (d) a provision (of this Act or any other Act) that includes an amount in assessable income wholly or partly because of the notional amount; and
Note: An example is Subdivision 20‑A, which may include in assessable income a recoupment of a loss or outgoing if the entity can deduct an amount for the loss or outgoing.
 (e) a provision (of this Act or any other Act) that excludes expenditure from:
 (i) the *cost base or *reduced cost base of a *CGT asset; or
 (ii) an element of that cost base or reduced cost base.
Note: An example is section 110‑45, which may exclude deductible expenditure from elements of the cost base of an asset.
 (2) Subsection (1) does not apply to amounts that the *R&D entity can deduct under the following:
 (a) subsection 355‑315(2);
 (b) subsection 355‑475(1);
 (c) subsection 355‑525(2).

355‑110  Notional deductions include prepaid expenditure
  For the purposes of this Division, if:
 (a) apart from Subdivision H (prepaid expenditure) of Division 3 of Part III of the Income Tax Assessment Act 1936, an *R&D entity can deduct an amount under section 355‑205 or 355‑480 for an income year (the present year) or an earlier income year; and
 (b) that Subdivision applies to the calculation of that amount;