• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 10/15/2013

Australia - Documentation of R&D activities is critical 

October 15: A decision of the Administrative Appeals Tribunal (AAT), representing a shift in the AAT’s approach to mining claims, has broader implications for all companies that conduct research and development (R&D) activities in a production environment.

Consistent with other recent AAT decisions, the generation, collection, and retention of strong documentary records to evidence R&D activities and associated expenditure is critical to sustaining R&D claims.

Also, R&D activities must be distinguishable from those conducted for only production (or non-R&D) purposes.

Contemporaneous documentation

Contemporaneous documentation demonstrating the “experimental” nature of the R&D activities remains key. In brief, companies claiming R&D activities must retain:

  • Documentation identifying the knowledge gaps and technical unknowns that the R&D will explore (with reference to pre-existing technology at the time of the project’s commencement)
  • Evidence of initial hypotheses and the purpose underlying the R&D activities, and how those may have changed over the course of the project
  • Records of trials or experimentation undertaken to test hypotheses, results generated, analysis undertaken, and any conclusions reached

Taxpayers that undertake R&D activities but do not produce or retain strong evidence of those activities may see any R&D claim disallowed, whether under the old R&D rules (for claims prior to the 2012 income year) or the new R&D tax incentive.

Read an October 2013 report prepared by the KPMG member firm in Australia: Substantiation remains key for R&D tax claims

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now