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Modification or exception to section 37F of Act (Deduction for incremental expenditure on research and development)

Income Tax (Amalgamation of Companies) Regulations 2011

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—(1) Where —(a)an amalgamating company ceases to exist on the date of amalgamation; and(b)the amalgamating company has a research and development account which is in credit immediately before the amalgamation, then section 37F of the Act shall apply to the amalgamated company as if it is the amalgamating company subject to the following provisions:(i)on the date of amalgamation there shall be credited to the research and development account of the amalgamated company an amount equivalent to the amount standing to the research and development account of the amalgamating company immediately before the date of amalgamation; (ii)as soon as the research and development account of the amalgamated company is credited with the amount referred to in sub-paragraph (i), the balance standing to the research and development account of the amalgamating company shall be reduced to nil by debiting it with the same amount; (iii)any credit and debit to the research and development account of the amalgamated company subsequent to the date of amalgamation shall be made in accordance with section 37F of the Act; and(iv)the base qualifying research and development expenditure of the amalgamated company shall be the aggregate of the amounts of qualifying expenditure incurred by all the amalgamating companies in their respective base years.(2) Notwithstanding section 37F of the Act, any amount credited to the research and development account of an amalgamating company on the day immediately before the date of amalgamation shall not be available for deduction against the assessable income of the amalgamated company for the year of assessment relating to the basis period in which the date of amalgamation falls, if that year of assessment is the same year of assessment relating to the basis period of the amalgamating company in which the day immediately before the date of amalgamation falls.

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