Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 355.310

Notional application of Division 40

  (1)   In addition to its application apart from this section, Division   40 also applies with the changes set out in this section for the purposes of:

  (a)   paragraph   355 - 225(1)(b) (excluded expenditure); and

  (b)   paragraph   355 - 305(1)(c); and

  (c)   section   355 - 315 (balancing adjustments).

  (2)   Firstly, substitute the following for references to a * taxable purpose in Subdivisions   40 - A to 40 - D (other than for the purposes of sections   40 - 100, 40 - 105 and 40 - 110):

 

Replacing references to a taxable purpose

Item

If this application of Division   40 is for the purposes of:

Substitute a reference to:

1

paragraph   355 - 225(1)(b) or 355 - 305(1)(c)

the purpose of conducting one or more of the * R&D activities covered by paragraph   355 - 305(1)(b)

2

section   355 - 315

the purpose of conducting one or more of the * R&D activities to which the R&D deductions (within the meaning of that section) relate

Note:   Sections   40 - 100, 40 - 105 and 40 - 110 are about working out an asset's effective life. Those sections already refer to the use of the asset for R&D activities.

  (3)   Secondly, assume that Division   40 does not apply to a building, nor to an extension, alteration or improvement to a building, (the building works ) for which the * R&D entity:

  (a)   can deduct amounts under Division   43 (capital works); or

  (b)   could deduct amounts under Division   43:

  (i)   apart from expenditure being incurred, or the building works being started, before a particular day; or

  (ii)   had the R&D entity used the building works for a purpose relevant to those building works under section   43 - 140 (using an area in a deductible way).

  (4)   Finally, assume that the following provisions had not been enacted:

  (a)   subsection   40 - 25(7) (meaning of taxable purpose);

  (b)   subsection   40 - 45(2) (assets to which Division   40 does not apply);

  (c)   section   40 - 425 (low - value pools);

  (d)   Subdivision   328 - D (capital allowances for small business entities).

Note:   Subsection   (3) and paragraph   (4)(b) mean that deductions under section   355 - 305 may be available for capital works other than building works.


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