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INCOME TAX ASSESSMENT ACT 1997 - SECT 355.525

Balancing adjustments for R&D partnership assets only used for R&D activities

  (1)   This section applies to an * R&D entity (the partner ) if:

  (a)   a * balancing adjustment event happens in an income year (the event year ) for an asset * held by an * R&D partnership; and

  (b)   the R&D partnership cannot deduct an amount under section   40 - 25, as that section applies apart from:

  (i)   this Division; and

  (ii)   former section   73BC of the Income Tax Assessment Act 1936 ;

    for the asset for an income year; and

  (c)   the partner is entitled under section   355 - 100 to * tax offsets for one or more income years for deductions (the R&D deductions ) under section   355 - 520 for the asset; and

  (d)   the partner is registered under section   27A of the Industry Research and Development Act 1986 for one or more * R&D activities for the event year; and

  (e)   if Division   40 applied with the changes described in section   355 - 310 (as affected by subsection   355 - 520(2)):

  (i)   the R&D partnership could deduct for the event year an amount under subsection   40 - 285(2) for the asset and the balancing adjustment event; or

  (ii)   an amount would be included in the R&D partnership's assessable income for the event year under subsection   40 - 285(1) for the asset and the balancing adjustment event.

Note 1:   This section applies in a modified way if the partner has deductions for the asset under former section   73BA or 73BH of the Income Tax Assessment Act 1936 (see section   355 - 325 of the Income Tax (Transitional Provisions) Act 1997 ).

Note 2:   Section   40 - 293 applies if the R&D partnership can deduct an amount under section   40 - 25, as that section applies apart from this Division and former section   73BC of the Income Tax Assessment Act 1936 .

  (2)   If the * R&D partnership could deduct for the event year an amount under subsection   40 - 285(2) for the asset and the event if Division   40 applied as described in paragraph   (1)(e), the partner can deduct the partner's proportion of that amount for the event year.

Note 1:   A deduction under this subsection is not a notional deduction (see subsection   355 - 105(2)).

Note 2:   A deduction under this subsection will result in a catch up amount for the partner (see section   355 - 467).

  (3)   If an amount would be included in the * R&D partnership's assessable income for the event year under subsection   40 - 285(1) for the asset and the event if Division   40 applied as described in paragraph   (1)(e), the partner's proportion of that amount is included in the partner's assessable income for the event year.

Note:   Some or all of the amount included in the partner's assessable income may result in a clawback amount for the partner (see section   355 - 448).


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