Under the R&D tax incentive, you can only obtain an R&D tax offset for expenditure incurred to an associate when that amount is paid. If you do not pay the amount until a later income year, you can choose to do either of the following:
- claim a deduction under the normal income tax provisions, for example, the general deduction provision, section 8-1 of the ITAA 1997, for the income year in which the amount was incurred.
- claim a notional R&D deduction in the year you make the payment.
This choice must be made by the time the R&D entity lodges its income tax return for the most recent income year before the income year in which the payment is made.
If you claim a deduction for this expenditure under the first choice you will no longer be entitled to claim a notional R&D deduction in the year you make the payment. This cannot be reversed, for example, you cannot later request an amendment of the assessment to disallow the deduction you previously claimed. In addition to claiming this amount as a deduction in the Company tax return 2014, you will also need to record this expenditure that you have claimed under other income tax provisions in Part D item 3.
If you wish to claim the expenditure under the second choice, you will need to record an amount of R&D expenditure incurred to associates to be carried forward in Part D item 5. Also, if you have included the amount of R&D expenditure incurred to associates to be carried forward in item 6 Calculation of total profit or loss of the Company tax return 2014, you will need to add this amount back at D Preliminary calculation to ensure you do not also claim this amount as a deduction under the normal income tax provisions.
Find out about:
- Item 1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward)
- Item 2 Current year R&D expenditure incurred to associates
- Item 3 Current year R&D expenditure incurred to associates claimed under other provisions
- Item 4 R&D expenditure paid to associates in the current year
- Item 5 R&D expenditure incurred to associates to be carried forward
See also
Item 1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward)
Enter at E1 R&D expenditure to associates incurred in prior year, not paid, not claimed (carried forward) the total amount of R&D expenditure you have incurred to your associates in earlier income years commencing on or after 1 July 2011 that has not yet been paid or claimed. This amount is carried forward from earlier income year(s).
Item 2 Current year R&D expenditure incurred to associates
Enter at E2 the total amount of R&D expenditure you have incurred to your associates in 2013–14, including amounts that have not yet been paid.
Item 3 Current year R&D expenditure incurred to associates claimed under other provisions
Enter at E3 Current year R&D expenditure incurred to associates claimed under other provisions the total amount of R&D expenditure you have incurred to your associates in 2013–14, but claimed under other provisions of the ITAA 1936 or ITAA 1997 because the amount was not paid in 2013–14.
If you claim a deduction for this expenditure under another provision of the ITAA 1936 or ITAA 1997, you will no longer be entitled to claim a notional R&D deduction in the year you make the payment. This choice cannot be reversed, for example, you cannot later request an amendment of the assessment to disallow the deduction you claimed.
If you choose to claim your associate expenditure under another provision of the ITAA 1936 or ITAA 1997, you need to ensure that you do not add this expenditure back at D Preliminary calculation on the Research and development tax incentive schedule or D Accounting expenditure in item 6 subject to R&D tax incentive item 7 on the Company tax return 2014. Expenditure to your associate claimed under another provision of the ITAA 1936 or ITAA 1997 should be treated the same as other expenditure claimed under that provision within the Company tax return 2014.
Item 4 R&D expenditure paid to associates in the current year
Enter at E4 R&D expenditure paid to associates in the current year the total amount of R&D expenditure you have paid to your associates in 2013–14. This could include amounts you have incurred and paid in 2013–14, or amounts you have incurred in earlier income years commencing on or after 1 July 2011, that have been paid in 2013–14 and that you have not previously claimed as a deduction under other provisions of the ITAA 1997 or ITAA 1936. The amount at E4 should be equal to the amount you have shown at Part A item 6 R&D expenditure – Paid to associates in the current year.
Item 5 R&D expenditure incurred to associates to be carried forward
If you have incurred expenditure to an associate during 2013–14 or in earlier income years commencing on or after 1 July 2011, you will be entitled to carry the amount forward and claim it as a notional R&D deduction in the year you make the payment to your associate if you have not either:
- paid the amount
- claimed it under another provision of the ITAA 1936 or ITAA 1997.
Calculate the amount to be shown at E R&D expenditure incurred to associates to be carried forward using Worksheet 1 below (note that if you complete the form on your computer, this will be calculated for you):
Label |
Calculation element |
Amount |
|---|---|---|
E1 |
R&D expenditure incurred to associates in prior years (not paid, not claimed) |
$ |
E2 |
Plus current year R&D expenditure incurred |
$ |
E3 |
Less amount claimed under other provisions |
$ |
E4 |
Less amount paid and claimed in current year |
$ |
E |
E1 + E2 – E3 – E4 = E Expenditure to associates to be carried forward |
$ |
Enter the result from E on Worksheet 1 above at Part D item 5 label E R&D expenditure incurred to associates to be carried forward. Note that if you complete the form on your computer, it will be calculated for you.
If you have already included this expenditure incurred to associates to be carried forward in item 6 Calculation of total profit or loss on the Company tax return 2014, also include this amount at D Preliminary calculation.
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