Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 378 - Digital games (tax offset for Australian expenditure on digital games)  

Subdivision 378-B - Qualifying Australian development expenditure  

SECTION 378-45   Expenditure incurred by prior companies in completing or porting a digital game  

Expenditure incurred by outgoing company attributed to incoming company

378-45(1)    
For the purposes of this Division, if a company (the incoming company ) takes over the development of a *digital game from another company (the outgoing company ):

(a)    expenditure incurred by the outgoing company in relation to *completing or *porting the game is taken to have been incurred by the incoming company; and

(b)    for the purposes of determining the extent to which that expenditure is *qualifying Australian development expenditure of the incoming company, the incoming company is taken:

(i) to have been an Australian resident at any time when the outgoing company was an Australian resident; and

(ii) to have been a foreign resident at any time when the outgoing company was a foreign resident; and

(iii) to have had a *permanent establishment in Australia at any time when the outgoing company had a permanent establishment in Australia; and

(iv) to have had an *ABN at any time when the outgoing company had an ABN; and

(c)    expenditure that the incoming company incurs in order to be able to take over the development of the game is to be disregarded for the purposes of this Division; and

(d)    any activities carried out by the outgoing company in relation to the game are taken, for the purposes of paragraph 378-25(1)(e) and subparagraphs 378-25(3)(e)(ii) and (5)(e)(ii) , to have been carried out by the incoming company in relation to the game.

Expenditure previously attributed to outgoing company attributed to incoming company

378-45(2)    
For the purposes of subsection (1) :

(a)    expenditure incurred by the outgoing company in relation to *completing or *porting the *digital game includes expenditure that the outgoing company is itself taken to have incurred on the digital game because of the operation of subsection (1) or a previous operation of that subsection; and

(b)    the outgoing company is taken:

(i) to have been an Australian resident at any time when the outgoing company is taken to have been an Australian resident because of the operation of subsection (1) or a previous operation of that subsection; and

(ii) to have been a foreign resident at any time when the outgoing company was a foreign resident because of the operation of subsection (1) or a previous operation of that subsection; and

(iii) to have had a *permanent establishment in Australia at any time when the outgoing company is taken to have had a permanent establishment in Australia because of the operation of subsection (1) or a previous operation of that subsection; and

(iv) to have had an *ABN at any time when the outgoing company is taken to have had an ABN because of the operation of subsection (1) or a previous operation of that subsection; and

(c)    activities carried out by the outgoing company in relation to the digital game include activities that the outgoing company is taken to have carried out in relation to the digital game because of the operation of subsection (1) or a previous operation of that subsection.

Example:

If Uncle Carty Ltd starts out developing a digital game and then Mr Grouble Ltd takes over the development of the digital game, Mr Grouble Ltd is taken to have incurred the expenditure that Uncle Carty Ltd incurred on the digital game. If Lousie Ltd subsequently takes over the development of the digital game from Mr Grouble Ltd, Lousie Ltd is taken to have incurred the expenditure that Mr Grouble Ltd incurred on the digital game (including the expenditure of Uncle Carty Ltd that is attributed to Mr Grouble Ltd).