INCOME TAX ASSESSMENT ACT 1997 - SECT 355.405 Expenditure not at risk

INCOME TAX ASSESSMENT ACT 1997 - SECT 355.405

  (1)   An * R&D entity cannot deduct expenditure under section   355 - 205 or 355 - 480 if:

  (a)   when it incurs the expenditure, the R&D entity or its * associate had received, or could reasonably be expected to receive, consideration:

  (i)   as a direct or indirect result of the expenditure being incurred; and

  (ii)   regardless of the results of the activities on which the expenditure is incurred; and

  (b)   that consideration is equal to or greater than the expenditure.

Note:   Section   355 - 205 is about deductions for R&D expenditure. Section   355 - 480 is about deductions for earlier year associate R&D expenditure.

  (2)   If:

  (a)   when an * R&D entity incurs expenditure, the R&D entity or its * associate had received, or could reasonably be expected to receive, consideration:

  (i)   as a direct or indirect result of the expenditure being incurred; and

  (ii)   regardless of the results of the activities on which the expenditure is incurred; and

  (b)   that consideration is less than the expenditure;

the R&D entity cannot deduct under section   355 - 205 or 355 - 480 so much of the expenditure as is equal to the consideration.

  (3)   For the purposes of paragraphs   (1)(a) and (2)(a), have regard to:

  (a)   anything that happened or existed before or at the time the expenditure is incurred; and

  (b)   anything that is likely to happen or exist after that time.

  (4)   This section does not apply to expenditure incurred on * R&D activities covered by paragraph   355 - 210(1)(b) or (c).

Note:   Those paragraphs cover R&D activities conducted for foreign residents.