Item 2 Salary expenditure

(relevant to Australian owned and foreign owned R&D)

At item 2 enter the amount of eligible salary expenditure for employees who are actually carrying out an eligible R&D activity (as defined in subsection 73B(1) of the ITAA 1936), including:

• salaries, wages, allowances, bonuses, overtime payments, penalty rate payments, annual leave, sick leave and long service leave, and
• on-costs such as contributions to a superannuation fund, premiums for workers' compensation insurance and payroll tax.

You may need to apportion the expenditure incurred between R&D and non-R&D activities.

You cannot claim this type of expenditure in respect of Australian owned R&D unless your aggregate R&D amount is greater than $20,000.

You cannot claim this type of expenditure in respect of foreign owned R&D unless your expenditure on foreign owned R&D is greater than $20,000.

This item does not include:

• salary expenditure incurred in the construction of R&D plant, depreciating assets, structural improvements and buildings
• salary expenditure of R&D support staff not directly connected with the research activity - include those at item 3 Other R&D expenditure
• salary expenditure in respect of Australian owned R&D where your aggregate R&D amount is less than or equal to $20,000
• salary expenditure in respect of foreign owned R&D where your expenditure on foreign owned R&D is less than or equal to $20,000.
• the amount of salary expenditure claimed in accordance with the prepayment provisions (sections 82KZL to 82KZMF of the ITAA 1936).

At E enter the total R&D salary expenditure incurred (the base amount).

At F enter any amount of R&D salary expenditure on Australian owned R&D claimable at 100%.

At G enter any amount of R&D salary expenditure on Australian owned R&D claimable at 125%.

At A enter any amount of salary expenditure on foreign owned R&D.

More information

For more information, see:

• subsection 73B(1) of the ITAA 1936
• Taxation Ruling TR 2002/1
• Guide to the R&D tax concession.