Section EJ 23 — Income Tax Act 2007: Allocation of deductions for research, development, and resulting market development

EJ 23 Allocation of deductions for research, development, and resulting market development When this section applies (1) This section applies when a person has— (a) a deduction for expenditure incurred on research or development that the person chooses to allocate under section DB 34(7) (Research or development): (b) a deduction for an amount of depreciation loss for an item used for research or development, that the person chooses to allocate under section EE 1(5) (What this subpart does): (c) a deduction for expenditure incurred on market development for a product that has resulted from expenditure incurred on research or development that the person chooses to allocate under section EJ 22(2) . Timing of deduction (2) The person must allocate the deduction to an income year— (a) in which the person derives an amount of income that is assessable income that the person would not have derived but for— (i) expenditure that gives rise to a deduction that may be allocated under this section: (ii) the use or disposal of an item for which the person has an amount of depreciation loss that may be allocated under this section: (b) to which under Part I (Treatment of tax losses) a loss balance is carried forward for the income year in which the expenditure or depreciation loss was incurred. Minimum amount of deduction allocated to income year (3) The person must not allocate to an income year (the current year ) an amount of deductions referred to in subsection (1) that is less than the lesser of— (a) the amount of assessable income referred to in subsection (2)(a) that the person derives in the current year: (b) the amount of the deductions that have not been allocated to an income year before the current year. Maximum amount of deduction allocated to income year (4) The person must not allocate to an income year (the current year ) an amount of deductions referred to in subsection (1) that is more than the greater of— (a) the amount of assessable income referred to in subsection (2)(a) that the person derives in the current year: (b) the amount of the deductions that— (i) arise in other income years from which a loss balance may be carried forward under Part I to the current year; and (ii) have not been allocated to income years before the current year. Defined in this Act: amount , assessable income , deduction , depreciation losses , development , income year , loss balance , research , Compare: 2004 No 35 s EJ 21