The ATO released an interpretive decision ID 2012/5 on 27th January 2012 which discusses whether expenditure incurred on a building project was allowable under the R & D Concessions.
A property developer acquired and developed land. The building had in its design an innovative heating system. The developer wished to claim construction costs of the building under the R&D concessions. The builders contention was the costs were expenditure for his development business, and not capital costs, and that the law only applies to costs on capital account.
The ATO determined the costs were not allowable under the R&D tax concessions. The determination states that ‘expenditure incurred by a taxpayer in the acquisition or construction of a building, whether on capital or revenue account, is excluded from being 'research and development expenditure' as defined in subsection 73B(1) of the ITAA 1936.’
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