Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 2/18)
Character Range: 5185271–5187961

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.
 (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.
Note 1: A deduction under this subsection is not a notional deduction (see subsection 355‑105(2)).
Note 2: A deduction under this subsection results in a catch up amount for the R&D entity (see section 355‑465).
 (3) If an 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), that amount is included in the R&D entity's assessable income for the event year.
Note: Some or all of the amount included in the R&D entity's assessable income may result in a clawback amount for the R&D entity (see section 355‑446).

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: For the purposes of a deduction under section 355‑305 or 355‑520 for an asset's decline in value, the arm's length rules in Division 40 apply as part of the notional application of that Division under that section.

355‑405  Expenditure not at risk
 (1) An *R&D entity cannot deduct expenditure under section 355‑205 or 355‑480 if:
 (a) when it incurs the expenditure, the R&D entity or its *associate had received, or could reasonably be expected to receive, consideration:
 (i)