13 March 2024 | Hybrid | R&D Incentive Program TD 2023/5 and TA 2023/4

Aggregated Turnover TD 2023/5 – relating to the calculation of aggregated turnover, with a focus on defining what constitutes a ‘connected entity’.

This is particularly important for those small to medium-sized entities that have a shareholder base that is insufficiently diverse or several parties may be related. A ‘connected entity’ would typically be any entity that owns, or has the right to acquire ownership, 40% of voting power (similar rules for non-company entities). However, the Commissioner’s discretion can be sought where the control % is less than 50%. The TD explores various scenarios where control could be determined to be held by another entity.

Associated Entities TA 2023/4 – this TA explores several key concepts:

• Eligible ‘R&D entity’ – typically an incorporated body corporate, does not include a Trust.
• ‘By or For’ rules – determining on whose behalf the R&D activities are carried out.
• Whether expenditure has been ‘incurred’ – the potential impact of future events or contingencies affecting the obligation to pay
• Related entity markups
• Expenditure not paid/constructively paid
• Expenditure not at risk