(relevant to Australian owned and foreign owned R&D)
Item 4 is a component of paragraph (c) of the definition of research and development expenditure in subsection 73B(1) of the ITAA 1936 'Other R&D expenditure'. It covers any expenditure incurred under a contract to another party (other than an RRA) that is directly in respect of relevant R&D activities carried on, by or on behalf of the company, or wholly or primarily on behalf of a grouped foreign company.
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 excludes:
- contracted expenditure carried out by an RRA (enter this at item 1)
- expenditure under a contract that is, in substance, for the acquisition of plant and not for the receipt of services
- other expenditure in respect of Australian owned R&D where your aggregate R&D amount is less than or equal to $20,000
- other expenditure in respect of foreign owned R&D where your expenditure on foreign owned R&D is less than or equal to $20,000
Adjust the amount of 'contract-other' expenditure you claim in accordance with the prepayment provisions (sections 82KZL to 82KZMF of the ITAA 1936). Subsection 73B(9) of the ITAA 1936 does not allow a deduction for expenditure incurred on R&D activities on behalf of any other person unless the expenditure is incurred wholly or primarily on behalf of a grouped foreign company.
At N enter the total amount of contract-other expenditure incurred (the base amount).
At O enter any amount of the contract-other expenditure on Australian owned R&D claimable at 100%.
At P enter any amount of the contract-other expenditure on Australian owned R&D claimable at 125%.
At Q enter any amount of the contract-other expenditure on foreign owned R&D.
The total of the amounts at O, P and Q must equal the base amount at N otherwise, a warning message 'Your claim does not balance' will display in the Excel spreadsheet.
More information
For more information, see:
- subsection 73B(1) of the ITAA 1936
- Guide to the R&D tax concession.