Excluded expenditure

You can’t include any of the following expenditure in your RDTI claim:

Property-related expenditure

• expenditure incurred in acquiring depreciable property or that would be depreciable in the absence of an election under section EE 8 of the Income Tax Act 2007
• expenditure that contributes to the cost of depreciable tangible property (other than prototypes) or tangible property that would be depreciable in the absence of an election under section EE 8 of the Income Tax Act 2007 (limited exceptions may apply)
• depreciation on property to the extent the cost of the property is eligible expenditure
• depreciation on pooled property where an item in the pool is not used solely in performing R&D
• certain amounts of depreciation when property is acquired from an associate
• expenditure to acquire an interest in intangible property other than software

Expenditure related to associates

• profits on R&D services and property provided by associates
• amounts in excess of market value for leasing assets from associates

Land-related expenditure

• expenditure to acquire land
• expenditure on remediating land

Expenditure supported by other tax credits or grants

• expenditure for which you have received an R&D tax credit from another country
• expenditure that relates to a government or local authority grant (some exceptions apply in relation to Callaghan Innovation project grants)

Expenditure outside spending thresholds

• if your eligible expenditure is less than $50,000, expenditure or loss that is not for an approved research provider (ARP)
• amounts in excess of $120m unless you have approval for a higher amount (this includes any amounts spent by your associates on R&D)

Expenditure outside value thresholds

• expenditure on goods or services in excess of market value
• depreciation when an asset is written off or sold below its adjusted tax value
• expenditure on inputs used, or subject to a process or transformation, to the extent the expenditure does not exceed the value of the output from that expenditure (feedstock rule)

Certain software-related expenditure

• expenditure on bespoke software
• internal software development expenditure in excess of $25m (this includes any amounts spent by your associates on R&D)

GST, interest and finance

• the GST input portion of expenditure
• interest and other financing costs

Expenditure on discouraged activities

• expenditure incurred by petroleum miners, mineral miners or a person who would be a mineral miner of geothermal energy (limited exceptions may apply)

Non-eligible R&D-related activities

• the cost of acquiring technology that is used as a basis for further R&D activities
• expenditure to commercialise the results of R&D activity

Doubled up expenditure

• someone else’s eligible expenditure

Other types of excluded expenditure

• gifts
• expenditure in determining a person’s entitlement to an R&D tax credit
• expenditure on corporate governance activities
• expenditure on decommissioning