Income Tax Assessment Act 1936

Section 82KZMD sets the amount and timing of deductions for expenditure that a taxpayer incurs in a year of income (the expenditure year), if:

apart from that section, the taxpayer could deduct the expenditure for the expenditure year under:

section 8‑1; or

section 355‑205 (R&D expenditure) or 355‑480 (earlier year associate R&D expenditure);

the requirements in subsections (2), (3), (4) and (5) are met.

The taxpayer:

must:

carry on a business; or

be a taxpayer that is not an individual and that does not carry on a business; and

if the taxpayer is a small business entity, or is covered by subsection (2A), for the expenditure year—must, before lodging its return of income for that year or within such further time as the Commissioner allows, choose to apply section 82KZMD to the expenditure.

A taxpayer is covered by this subsection for the expenditure year if:

the taxpayer is not a small business entity for the expenditure year; and

the taxpayer would be a small business entity for the expenditure year if:

each reference in Subdivision 328‑C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $10 million were instead a reference to $50 million; and

the reference in paragraph 328‑110(5)(b) of that Act to a small business entity were instead a reference to a taxpayer covered by this subsection.

The expenditure must be:

either:

incurred in carrying on a business; or

incurred otherwise than in carrying on a business by a taxpayer that is not an individual; and

incurred under an agreement (see subsection 82KZL(1); and

incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year.

The expenditure must not be excluded expenditure (see subsection 82KZL(1)).

The expenditure must not meet a pre‑RBT obligation (see subsection 82KZL(1)).

Section 82KZMD has effect:

despite section 8‑1 of the Income Tax Assessment Act 1997; and

subject to Division 245 of that Act.