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 2013–14 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 earlier income years commencing on or after 1 July 2011.
If you are unable to claim the R&D tax incentive for expenditure related to the recoupment because section 355-405 of the ITAA 1997 applies (the expenditure is not at risk), you do not need to make a clawback adjustment. If section 355-405 does not apply to expenditure related to the recoupment, you may still need to make a clawback adjustment.
Find out about:
- Item 1 Recoupment(s) – (entitled to/received)
- Item 2 R&D expenditure related to recoupment(s)
- Item 3 Project expenditure for which recoupment(s) paid
- Item 4 R&D recoupment tax – 10% tax payable
See also
Item 1 Recoupment(s) – (entitled to/received)
Enter 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 the current income year, that relate to notional R&D deductions for which you have claimed an R&D tax offset in the current income year or in earlier income years commencing on or after 1 July 2011.
Item 2 R&D expenditure related to recoupment(s)
Enter 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 the current income year or in earlier income years commencing on or after 1 July 2011. Do not include R&D expenditure that you have already taken into account to work out another clawback adjustment (extra income tax) for another recoupment.
Item 3 Project expenditure for which recoupment(s) paid
Enter 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 (including R&D and other amounts). You will need to consider the terms of the grant agreement to work out what your project expenditure is in respect of each recoupment. A recoupment may be an instalment under the agreement.
When you notionally deduct further amounts related to this recoupment under the R&D tax incentive in future years, you will be required to amend your Company tax return 2014 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 related to this recoupment, or
- 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
Enter 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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