Document ID: chunk:federal_register_of_legislation:C2014C00703:clause:1_2:p4
Version: federal_register_of_legislation:C2014C00703
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 4/6)
Character Range: 24151–26821

that core R&D activity were conducted during the income year;
 (c) there is written evidence that the R&D activity is conducted for the body corporate but not for the purposes of that permanent establishment.
Note: The body corporate is the R&D entity to the extent that it carries on business through that permanent establishment (see subsection 355‑35(2)).

355‑220  R&D activities conducted for a foreign entity
 (1) For the purposes of paragraph 355‑210(1)(c), the conditions for an *R&D activity conducted for one or more foreign residents are as follows:
 (a) the R&D activity is conducted solely within Australia or an external Territory;
 (b) if the R&D activity is a *supporting R&D activity, each corresponding *core R&D activity must be:
 (i) an activity conducted, or to be conducted, solely within Australia or an external Territory; and
 (ii) an activity for which the *R&D entity is or has been registered under section 27A of the Industry Research and Development Act 1986, or could be registered for an income year if that core R&D activity were conducted during the income year;
 (c) when the R&D activity is conducted:
 (i) each foreign resident is *connected with the R&D entity; or
 (ii) for each foreign resident—either the foreign resident is an *affiliate of the R&D entity or the R&D entity is an affiliate of the foreign resident;
 (d) the R&D activity is conducted:
 (i) in accordance with a written agreement binding on only the R&D entity and each foreign resident; and
 (ii) either directly by the R&D entity, or indirectly by another entity under an agreement binding on the R&D entity;
 (e) the R&D activity is not conducted in connection with an agreement covered by subsection (2).
Note: An example of conducting an R&D activity indirectly under a contract is conducting the R&D activity under a subcontract, or one of a chain of subcontracts, under the contract.
 (2) An agreement is covered by this subsection if:
 (a) the agreement is binding on the R&D entity (the first entity) and an R&D entity that:
 (i) is *connected with the first entity; or
 (ii) has the first entity as an *affiliate, or is an affiliate of the first entity;
  while the *R&D activity is conducted; and
 (b) the R&D activity is to be conducted under the agreement by the first entity or by an entity:
 (i) who is not bound by the agreement; and
 (ii) who is to conduct the R&D activity directly or indirectly under another agreement to which the first entity is, or will become, bound.
Note: One effect of this subsection is that, even if the R&D entity has an agreement with the foreign resident for conducting the R&D activity, the R&D entity cannot deduct