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    R&D partnerships

    There are special rules in Subdivision 355-J of the ITAA 1997 regarding the R&D tax incentive for certain types of partnerships known as R&D partnerships. If you are in a partnership and you and each of the other partners, are R&D entities then the partnership is an R&D partnership.

    Generally, a partnership is an association of persons (other than a company or limited partnership) carrying on business as partners or in receipt of ordinary or statutory income jointly. A limited partnership is also a partnership, although it is not an eligible R&D entity.

    An R&D partnership cannot register for the R&D tax incentive. Instead, each partner wishing to claim the R&D tax incentive must register.

    If you are a partner of an R&D partnership, the amount you can claim is based on your 'proportion' (as a partner) of the notional R&D deductions of the partnership. This proportion is based on your interest (as a partner) in the net income or loss of the R&D partnership, unless the partners have agreed that the partners should bear or be entitled to a different proportion.

    Similarly, as a partner you may also have to pay your proportion of extra tax or include your proportion of additional amounts in your assessable income in certain circumstances. Examples of these circumstances may be where:

    • recoupments are received that relate to expenditure on R&D activities by the R&D partnership and you have claimed the R&D tax incentive for these activities (clawback adjustment)
    • amounts are received by the R&D partnership for the disposal of any R&D results.

    In addition, any R&D activities conducted by or for the R&D partnership are taken to be conducted by or for each partner instead of the partnership.

    The R&D partnership does not take into account any of the following when working out its net income or partnership loss:

    • Any R&D expenditure taken to be incurred by you and the other partners as a result of subdivision 355-J of the ITAA 1997
    • Any amount you and the other partners, can deduct as a result of subdivision 355-J of the ITAA 1997
    • Any recoupment taken to be received by you and the other partners as a result of subdivision 355-J of the ITAA 1997.

    See also:

    • Subdivision 355-J of the ITAA 1997 for information about R&D partnerships and the R&D tax incentive  
    • Taxation Ruling TR 94/8 Income tax: whether business is carried on in partnership (including 'husband and wife' partnerships) – for information to help you to work out whether a business is carried on in partnership.
      Last modified: 16 Jun 2021QC 26121