Goodman Fiedler Wattie Ltd v Federal Commissioner of Taxation [1991] FCA 206

April 17th, 2014

The issues in these appeals was the disallowance by the Commissioner of deductions claimed by the taxpayer for the income year 1982-85 inclusive. The deductions fell into two categories; payments made by the taxpayer to fund research carried on by the Queensland Institute of Technology (QIT) (the first period); and expenditure incurred thereafter by the taxpayer (the second period).


  • The taxpayer was a company with carried on its business in several divisions. In August 1981 the taxpayer contracted with the QIT to fund the establishment of a Monoclonal Antibodies Development Centre (MADC).
  • In 1982 separate premises were leased at Slacks Creek for the taxpayer’s Mabco Division to set up development and production facilities. Sales of the first monoclonal antibody product occurred in December 1982 and January 1983. Many technical problems arose and the taxpayer eventually sold the Mabco Division in June 1985.
  • The Commissioner asserted that the taxpayer had not commenced its business until the setting up of the premises in Slacks Creek. The taxpayer submitted that the income producing activity in which it was engaged during the first period should be characterised as an activity of R&D of monoclonal antibody products for manufacture and sale, as opposed to manufacturing and selling the products.
  • In respect of the second period, The Commissioner submitted that each new product of a company such as the taxpayer engaged in manufacturing and marketing as well as regular research was to be seen separately. Alternatively the Commissioner claimed that the taxpayer had not satisfied the burden of proof showing that the expenditures incurred by it was not of a capital nature.


The appeals were allowed in part:

  • For the first period it was found that an essential element of identifying the point of commencement of business activity is commitment to the project. The necessary commitment by the taxpayer was lacking in this case. The taxpayer engaged in activities of a provisional kind only during the first period.
  • In relation to the second period, the whole of the expenditure of the Mabco Division was deductible under either s 51(1) or s 73A(1).

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