If you are eligible for the R&D tax incentive and you receive a government recoupment (such as a government grant or reimbursement) that relates to expenditure that is eligible for the R&D tax incentive, clawback applies.
Clawback does not decrease the grant or offset you receive; rather it increases the income tax you are liable to pay. This income tax increase is called a 'clawback adjustment' or 'R&D recoupment tax'.
A clawback adjustment arises where during an income year you either receive or are entitled to receive a recoupment from an Australian government agency, or a state or territory body, and the following applies:
- the recoupment (such as a reimbursement) relates to expenditure incurred on certain activities or the recoupment (such as a grant) requires expenditure to either be or have been incurred on certain activities
- you are eligible for the R&D tax incentive for that expenditure (or decline in value notional deductions where the expenditure was for a depreciating asset used in those activities).
Only complete this item if you have received a government recoupment during 2012–13 that relates to an amount you have notionally deducted at Part A Calculation of notional R&D deduction on the Research and development tax incentive schedule in the current income year or in 2011–12.
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Item 1 Recoupment(s) – (entitled to/received)
Write at item 1 Recoupment(s) – (entitled to/received) the total amount of recoupment you have received, or become entitled to receive, (other than under the CRC program) in 2012–13, which relate to notional R&D deductions for which you have claimed an R&D tax offset in 2012–13 or 2011–12.
Item 2 R&D expenditure related to recoupment(s)
Write at item 2 R&D expenditure related to recoupment(s) the total amount claimed as a notional deduction under the R&D tax incentive that relates to the recoupment shown at item 1 Recoupment(s) – (entitled to/received). This may include amounts claimed as a notional deduction in 2012–13 or 2011–12.
Item 3 Project expenditure for which recoupment(s) paid
Write at item 3 Project expenditure for which recoupment(s) paid the total project expenditure for all years of the project for which the recoupment has been paid.
An example of where this amount would differ from the amount at item 2 R&D expenditure related to recoupment(s) would be where a government recoupment has been received in year 1 of a five-year project. You may have only notionally deducted $200,000 under the R&D tax incentive in 2012–13, but are required to spend another $800,000 over the next four years. In this scenario, the amount you would show at item 2 R&D expenditure related to recoupment would be $200,000. However, you would show the total budgeted project expenditure of $1 million at item 3 Project expenditure for which recoupment(s) paid.
When you notionally deduct further amounts related to this project under the R&D tax incentive in future years, you will be required to amend your Company tax return 2013 in the Calculation statement at label M R&D recoupment tax to include a further amount of R&D recoupment tax. Further amendments will be required until either:
- there is no more expenditure under the project
- the amount of the extra tax recouped at label M R&D recoupment tax in the Calculation statement becomes equal to the amount of the government recoupment received.
Item 4 R&D recoupment tax – 10% tax payable
Write at M item 4 R&D recoupment tax – 10% tax payable the extra tax required on your recoupment as calculated under Subdivision 355-G of the ITAA 1997.
If you have claimed the R&D tax incentive at item 21 and you have received a government recoupment (such as a government grant or reimbursement) that relates to expenditure that you have claimed a notional deduction for under the R&D tax incentive, the income tax you are liable to pay on the recoupment will be increased. This is referred to as a clawback adjustment.
The clawback adjustment for each project is capped for grants, so that the extra tax payable cannot exceed the amount of the grant, that on a pro rata basis, you received for that project. As a result, if the sum calculated for M for each project exceeds the amount of the grant received for that project (which relates to the R&D expenditure), the amount to be shown at M for that project will be the amount of the grant.
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