• Service: Tax, R&D Incentives
  • Type: Regulatory update
  • Date: 20/09/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Anthony Petrilli

Anthony Petrilli
Director, Tax

+61 8 8236 3167

‘For whom’ are R&D activities undertaken 

by Anthony Petrilli, R&D Incentives Specialist

Under subdivision 355-D of the ITAA 1997, notional tax deductions arise in relation to expenditure incurred by an eligible R&D entity on R&D activities. However, notional tax deductions will not arise for R&D activities ‘conducted, to a significant extent, for one or more other entities’ other than the R&D entity. This is known as the ‘for whom’ test.

The purpose of the ‘for whom’ test is to limit claims to cases where the company is a major benefactor from its expenditure on R&D activities, and to prevent duplication of claims by different entities where essentially the same R&D activities are involved. In practice, the ‘for whom’ test is a question of fact to be resolved through an assessment of three key criteria:


  • who ‘effectively owns’ the know-how, IP, or other results arising from the R&D entity’s expenditure on the R&D activities
  • who has appropriate control over the conduct of the R&D activities
  • who bears the financial burden of carrying out the R&D activities?


Certain strict exceptions apply to the ‘for whom’ test, for example, where R&D activities are subject to a written agreement and conducted on behalf of foreign resident companies where Australia has a comprehensive double taxation agreement with that foreign country.


KPMG works with a range of companies across all industries and routinely assess their activities in relation to the 'for whom test'. This experience can assist claimants to identify the facts and address the three key criteria.


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