This Taxation Determination, released Wed 11.6.2014, concerns a situation where an R&D entity incurs expenditure on various stages of design activities (design expenditure), connected with it beginning to hold a tangible asset, and that expenditure also falls within the terms of s 355-205 of the ITAA 1997. Section 355-205 deals with the entitlement of R&D entities to deduct amounts of expenditure for the purpose of calculating any tax offset they are allowed under s 355-100.
Broadly, the Determination indicates that design expenditure will not be notionally deductible under s 355-205 where it is covered by para 355-225(1)(b) because it is included in the cost of a tangible depreciating asset for the purposes of Div 40. It includes a detailed example examining design expenditure over the life of a project and setting out when those expenditures would be included. The Determination was previously issued as Draft TD 2013/D9 and contains changes from the Draft.
DATE OF EFFECT: Applies to years of income commencing both before and after its date of issue.
[LTN 110, 11/6/14]