Draft Taxation Determination

TD 94/D21

Income tax: does 'expenditure on research and development activities' include expenditure on core technology?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 98/1.

FOI status:

1. Yes. Any amounts an eligible company receives as a result of having incurred expenditure on core technology for which a deduction is allowable under section 73B may constitute assessable income of the company under subsection 73B(27A). If the amount received can be categorised as a non-assessable grant or recoupment, deductions allowable under section 73B, as affected by sections 73C, 73CA and 73CB, for the year of income in which the amount was received (and, if necessary, earlier years of income) would be reduced (under section 73D) by the amount received.

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

3. 'Research and development' expenditure is defined for the purposes of subsection 73B(14) which provides a deduction of up to 150% where such expenditure exceeds $20000. Core technology expenditure is expressly excluded from that definition because the deduction for this expenditure is limited to 100% under subsection 73B(12).

Commissioner of Taxation
3/3/94

References

ATO references:
NO NAT 94/1107-1

Related Rulings/Determinations:

IT 2635

Subject References:
research and development
core technology

Legislative References:
ITAA 73B,
ITAA 73D