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Taxation Determination

TD 98/1

Income tax: does 'expenditure on research and development activities'. in subsection 73B(27A) and sections 73C and 73D of the Income Tax Assessment Act 1936, include 'core technology expenditure'?

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FOI status:

may be releasedFOI number: I 1015529

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Rulings TR 92/1 and TR 97/16 together explain when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. It has been claimed that expenditure on research and development activities does not include expenditure on core technology, on the basis that 'core technology expenditure' is expressly excluded from the definition of 'research and development expenditure' in subsection 73B(1).

2. We disagree with this view. The general phrase, 'expenditure on research and development activities', as used in subsection 73B(27A) and sections 73C and 73D, is the not the same as the defined phrase, 'research and development expenditure'. We think the general phrase more correctly takes its meaning from the definition of 'research and development activities' in subsection 73B(1).

3. Expenditure on acquiring, or acquiring the right to use, core technology that comes within the definition of 'core technology expenditure' in subsection 73B(1), is expenditure on an activity that comes within either paragraph (a) or (b) of the definition of 'research and development activities'.

4. The express exclusion of 'core technology expenditure' from the definition of 'research and development expenditure' is to allow for the specific operation of subsections 73B(12), (12A) and (12C), and to exclude this expenditure from being deductible under subsection 73B(14). It was not meant to affect the operation of subsection 73B(27A), or sections 73C or 73D.

5. Thus, subsection 73B(27A) and sections 73C and 73D may apply in respect of 'core technology expenditure'.

Note : Section 73D does not apply to amounts received as 'recoupments', as defined in section 20-25 of the Income Tax Assessment Act 1997, in the 1997-98 or a later year of income. Subdivision 20-A of this Act applies instead.

Commissioner of Taxation
4 February 1998

Previously released as TD 94/D21

References

ATO references:
NO 94/8239-3 98/482-5

ISSN 1038 - 8982

Related Rulings/Determinations:

IT 2635

Subject References:
core technology expenses
research and development expenses

Legislative References:
ITAA36 73B
ITAA36 73B(1)
ITAA36 73B(1)(a)
ITAA36 73B(1)(b)
ITAA36 73B(12)
ITAA36 73B(12A)
ITAA36 73B(12C)
ITAA36 73B(14)
ITAA36 73B(27A)
ITAA36 73C
ITAA36 73D
ITAA97 20-A
ITAA97 20-25

TD 98/1 history
  Date: Version: Change:
You are here 4 February 1998 Original ruling  
  20 December 2016 Withdrawn  

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