Post-administration Research and Development Tax Offsets Deemed Personal Property in Account

May 2023
Region: Asia Pacific

Companies entering external administration often have outstanding tax filings. The external controllers appointed conduct initial and ongoing reviews as to those filings. Then, in time, they either bring the filings up to date or engage the tax office in order to revisit historical filings. Aside from being legally required to address a company’s filings, external controllers often focus on a company’s taxation affairs because there may be offsets or refunds due that can be realised as assets as part of the estate or in any transactions. Depending on the corporate structure used and the rulings by the tax office, research and development (R&D) expenditure (among other expenses) can result in tax offsets and refunds post-administration. Securing those refunds can sometimes result in priority disputes. In a unanimous decision this week, the Court of Appeal considered various issues relevant to R&D offsets and their treatment under the Personal Property Securities Act (Cth) (PPSA) and the Corporations Act (Cth) (Act) in a post-administration context.

We consider the treatment of Australian R&D refunds as part of insolvent estates under the Act and the PPSA in our latest insight.