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2022 Annual Report for IISA Shows Rapid Decline in R&D Tax Dispute Litigation

January 23rd, 2023

Industry Innovation and Science Australia (IISA) is the government department responsible for determining whether companies’ activities meet the legislative criteria eligible under the R&D Tax Incentive.

The 2021-22 Annual Report for IISA was recently released, and a section of the report provides an update on legal matters and litigation relevant to the department.

When comparing the 2021-22 Annual Report with corresponding reports from preceding years, a rapid decline in the number of R&D Tax Disputes arising between companies and IISA is evident:

Year Ended	Number of Registrations	AAT Matters Resolved	AAT judgments handed down	Current AAT Matters at Year End
30 June 2022	12,090	10	0	12
30 June 2021	12,330	17	2	20
30 June 2020	10,544	26	4	28
30 June 2019	12,393	16	2	41

The above relates to ISA matters on activity eligibility only and not R&D Tax Disputes involving the ATO.

This reduction in litigation is despite the number of registrations not materially declining.

This decline may be attributable to a combination of:

• Changes to compliance processes by the regulators;
• Better quality of registrations submitted;
• Companies with ineligible activities refraining from participating in the programme;

Reduction in disputes is a good outcome for both companies and the regulators, and hopefully a sign of improved health of the R&D Tax Incentive overall.

Please get in touch with our office if you would like to speak to someone about a potential  R&D claim, or check out our website for more information.