Item 9 records deductions for depreciating assets (section 73BB of ITAA 1936), including certain capital works, used in carrying on R&D activities. They must have begun to be constructed, or have been acquired under contracts entered into, after midday Australian Eastern Standard Time on 29 January 2001.
The amount allowable is determined through a notional application of the provisions of Division 40 of ITAA 1997, subject to certain assumptions. These are set out in section 73BC of ITAA 1936.
For an asset applied to non-R&D purposes as well as R&D use in a year, you can claim the R&D portion of the decline in value under section 73BA of ITAA 1936. The remainder of the deduction is determined under Division 40 of ITAA 1997.
If an STS taxpayer, or a taxpayer who could otherwise allocate an asset to a Division 40 low-value pool, uses that asset for R&D activities as its first use, the taxpayer must claim deductions for it under section 73BA of ITAA 1936, not the STS (Subdivision 328-D of ITAA 1997) or low-value pool provisions (Subdivision 40-E of ITAA 1997). If the asset is used for non-R&D purposes for part of the year or in a subsequent year, deductions for that part of the year or the subsequent year will be considered under Division 40 of the ITAA 1997.
If an asset was not used for R&D in an earlier income year and the company was entitled to a deduction for the asset(s) under a Division 40 low-value pool or an STS pool in that year, you should continue to calculate deductions under the relevant pooling provisions, even if the asset is subsequently used for R&D.
You may need to complete the Capital allowances schedule 2007.
You cannot claim a deduction if the company is entitled to a deduction for the asset under the simplified tax system pooling provisions (Subdivision 328-B of ITAA 1997) or a Division 40 low-value pool (section 40-440 of ITAA 1997).
End of attentionAt H enter the notional Division 40 amount as determined under sections 73BA to 73BC of ITAA 1936 (the base amount).
At I enter the notional Division 40 amount as determined under sections 73BA to 73BC of ITAA 1936 claimable at 100%, including where the aggregate R&D amount is less than $20,000.
At J enter the notional Division 40 amount as determined under sections 73BA to 73BC of ITAA 1936, claimable at 125%.
The total of the amounts at I and J must equal the base amount otherwise, a warning message 'Your claim does not balance' will display in the Excel spreadsheet.
End of attentionMore information
For more information, see:
- sections 73BA, 73BB, 73BC of ITAA 1936
- Division 40 of ITAA 1997
- Division 43 of ITAA 1997
- Guide to the R&D tax concession