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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS

Division 355 - Research and Development

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History Div 355 inserted by No 93 of 2011, s 3 and Sch 1 item 1, effective 8 September 2011. No 93 of 2011, s 3 and Sch 4 items 1 to 6 contains the following application, savings and transitional provisions: Schedule 4 - Application, savings and transitional provisions Part 1 - Application provisions 1 Application of repeals and amendments   (1) The repeals and amendments made by this Act apply: (a) so far as they affect assessments - to assessments for income years commencing on or after 1 July 2011; and (b) so far as they relate to income years but do not affect assessments - to income years commencing on or after 1 July 2011; and (c) otherwise-to acts done or omitted to be done, states of affairs existing, or periods ending on or after the commencement of the first income year commencing on or after 1 July 2011. Note: For the purposes of an assessment for an income year commencing on or after 1 July 2011, regard may still be had to acts done or omitted to be done, states of affairs existing, or periods ending during an earlier income year. For example, regard may be had to expenditure incurred by other entities in income years commencing before 1 July 2011 for the purposes of paragraph 355-415(1)(b) of the Income Tax Assessment Act 1997. (2) However, each of the following applies in relation to the 2011-12 financial year and all later financial years: (a) section 29E of the Industry Research and Development Act 1986 (as inserted by Schedule 2); (b) the repeal of paragraph 39H(b) of the Industry Research and Development Act 1986; (c) section 46 of the Industry Research and Development Act 1986 (as amended by this Act). Part 2 - General savings provisions 2 Object   2 The object of this Part is to ensure that, despite the repeals and amendments made by this Act, the full legal and administrative consequences of: (a) any act done or omitted to be done; or (b) any state of affairs existing; or (c) any period ending; before such a repeal or amendment applies, can continue to arise and be carried out, directly or indirectly through an indefinite number of steps, even if some or all of those steps are taken after the repeal or amendment applies.3 Making and amending assessments, and doing other things etc., in relation to past matters   (1) Even though a provision is repealed or amended by this Act, the repeal or amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003): (a) making or amending an assessment (including under a provision that is itself repealed or amended); (b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended); in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies. Note: Examples of things covered by this subitem are as follows: (a) an eligible company may object under Part IVC of the Taxation Administration Act 1953 in an income year commencing on or after 1 July 2011 about a notice given under former section 73I of the Income Tax Assessment Act 1936 for an income year commencing before 1 July 2011; (b) an eligible company seeking registration under former section 39J of the Industry Research and Development Act 1986 for an income year commencing before 1 July 2011 may do so during an income year commencing on or after 1 July 2011; (c) Innovation Australia may give a certificate under former section 39M of the Industry Research and Development Act 1986 in an income year commencing on or after 1 July 2011 about research and development activities registered for an income year commencing before 1 July 2011. (2) Even though a provision is repealed or amended by this Act, the repeal or amendment is disregarded so far as it relates to a state of affairs: (a) that exists after the repeal or amendment applies; and (b) that relates to: (i) an act done or omitted to be done; or (ii) a state of affairs existing; or (iii) a period ending; before the repeal or amendment applies. Note: Examples of things covered by this subitem are as follows: (a) an amount may be included in an eligible company's assessable income under former subsection 73BF(4) of the Income Tax Assessment Act 1936 for an income year commencing on or after 1 July 2011 if the company receives in that income year an amount for the results of research and development activities for which the company had deductions under former section 73BA of that Act in an income year commencing before 1 July 2011; (b) an eligible company's deduction under section 73B of the Income Tax Assessment Act 1936 for expenditure incurred during an income year commencing before 1 July 2011 is reduced because of section 73C of that Act if, in an income year commencing on or after 1 July 2011, the company receives a recoupment of that expenditure from the Commonwealth. (3) To avoid doubt, this item extends to the repeal of subsection 286-75(3), and paragraph 286-80(2)(b), in Schedule 1 to the Taxation Administration Act 1953. In particular, if, in a particular case, the period in respect of which an administrative penalty is payable under subsection 286-75(3) in that Schedule: (a) has not begun; or (b) has begun but not ended; when those provisions are repealed, then, despite the repeal, those provisions continue to apply in the particular case until the end of the period.4 Saving of provisions about effect of assessments   4 If a provision or part of a provision that is repealed or amended by this Act deals with the effect of an assessment, the repeal or amendment is disregarded in relation to assessments made, before or after the repeal or amendment applies, in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.5 Repeals disregarded for the purposes of dependent provisions   5 If the operation of a provision (the subject provision) of any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003) made under any Act depends to any extent on a provision that is repealed by this Act, the repeal is disregarded so far as it affects the operation of the subject provision.6 Schedule does not limit operation of the Acts Interpretation Act 1901   6 This Schedule does not limit the operation of the Acts Interpretation Act 1901.

Subdivision 355-F - Integrity Rules

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History Subdiv 355-F inserted by No 93 of 2011, s 3 and Sch 1 item 1, effective 8 September 2011. For application, savings and transitional provisions see note under Div 355 heading.

SECTION 355-405  Expenditure not at risk

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355-405(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) as a direct or indirect result of the expenditure being incurred; and

(ii) regardless of the results of the activities on which the expenditure is incurred; and

(b) that consideration is equal to or greater than the expenditure.

Note: Section 355-205 is about deductions for R&D expenditure. Section 355-480 is about deductions for earlier year associate R&D expenditure.

355-405(2)

If:

(a) when an *R&D entity incurs expenditure, the R&D entity or its *associate had received, or could reasonably be expected to receive, consideration:

(i) as a direct or indirect result of the expenditure being incurred; and

(ii) regardless of the results of the activities on which the expenditure is incurred; and

(b) that consideration is less than the expenditure;

the R&D entity cannot deduct under section 355-205 or 355-480 so much of the expenditure as is equal to the consideration.

355-405(3)

For the purposes of paragraphs (1)(a) and (2)(a), have regard to:

(a) anything that happened or existed before or at the time the expenditure is incurred; and

(b) anything that is likely to happen or exist after that time.

355-405(4)

This section does not apply to expenditure incurred on *R&D activities covered by paragraph 355-210(1)(b) or (c).

Note: Those paragraphs cover R&D activities conducted for foreign residents.

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History S 355-405 inserted by No 93 of 2011, s 3 and Sch 1 item 1, effective 8 September 2011. For application, savings and transitional provisions see note under Div 355 heading.