The Australian Taxation Office (ATO) has issued draft Taxation Determination (TD) 2020/D1 regarding notional deductions for R&D activities where wage expenditure has been subsidized under the JobKeeper Payment scheme that was introduced to support businesses affected by COVID-19.
Draft Taxation Determination TD 2020/D1
We've published draft Taxation Determination TD 2020/D1 Income tax: notional deductions for research and development activities subsidised by JobKeeper payments.
This draft Determination sets out how the 'at-risk rule' applies to JobKeeper payments received by a research and development (R&D) entity:
- for paid employees who are wholly or partially engaged in R&D activities
- under the business participation entitlement.
It clarifies when an R&D entity would trigger the at-risk rule and cannot notionally deduct all or part of its wage expenditure for having received a JobKeeper payment. Expenditure the entity incurs on R&D activities that cannot be notionally deducted does not give rise to an R&D tax offset. For the portion of JobKeeper payments the entity receives that trigger the at-risk rule, no extra income tax is payable under the R&D clawback rules.
Read the full draft Determination for further details or to provide feedback.