Tax Laws Amendment (2007 Measures No. 5) Act 2007 (164 of 2007)

Schedule 11   Research and development

Part 1   Amendment of the Income Tax Assessment Act 1936

27   Subsection 73P(2) (definition of incremental expenditure )

Repeal the definition, substitute:

incremental expenditure means expenditure that:

(a) is research and development expenditure except:

(i) expenditure to lease or hire plant; and

(ii) expenditure under a contract to the extent that it is, in substance, for the acquisition of plant and not for the receipt of services; and

(b) can be taken into account in working out the amount of a deduction under subsection 73B(13) or (14) or could be taken into account in working out the amount of a deduction under subsection 73B(14) apart from paragraph 73B(14)(b).

Note: The effects of paragraph (b) of the definition of incremental expenditure include preventing a company from counting as incremental expenditure:

(a) expenditure that the company is required by subsection 73B(9) to disregard because it was incurred by the company for the purpose of carrying on research and development activities on behalf of another person; and

(b) expenditure on overseas research and development activities that is not certified expenditure and so is expenditure for which subsection 73B(17A) denies a deduction under subsection 73B(13) or (14).


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