• Service: Tax, R&D Incentives
  • Type: Regulatory update
  • Date: 6/05/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Anthony Petrilli

Anthony Petrilli
Director, Tax

+61 8 8236 3167

Research & Development tax offset and NTER entities 

by Anthony Petrilli, R&D Tax Specialist

The National Tax Equivalent Regime (NTER) is an administrative arrangement under which relevant taxation laws will be applied notionally to NTER entities, which are designated State and Territory government owned entities, as if they were subject to those laws. As of 31 December 2013, there are 175 NTER entities identified in the NTER register.

Historically, decision makers in these entities may not have considered eligibility to access the Research and Development (R&D) tax incentive, the Federal Government’s flagship R&D assistance program. Significant benefits can apply that could positively influence go/no go decisions when NTER entities consider undertaking R&D projects.


The R&D tax offset is designed to operate on a self assessment basis. NTER entities would need to self assess the eligibility of any activities conducted during an income year, to determine whether they are eligible R&D activities under Division 355 of the ITAA 1997.


The NTER Manual states that for NTER purposes, the R&D tax offset provisions in Division 355 of the ITAA 1997 will be applied with the following modifications:


  • every NTER entity will be deemed to be an 'R&D entity'
  • NTER entities will not be required to register R&D activities with Innovation Australia under section 27A of the Industry Research and Development Act 1986. However, NTER entities will be required to complete the approved application form for registering R&D activities and lodge that form with the NTER Administrator within 10 months after the end of the income year or such further period allowed by the NTER Administrator
  • item 2 of the table in subsection 355-100(1) (i.e. a R&D entity that is controlled by an exempt entity) will be deemed not to apply to any NTER entity.


For NTER entities either undertaking R&D activities, or planning to do so, KPMG’s R&D incentives practice is well placed to support your organisation throughout the process.


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