Confidential v Industry Research and Development (IR&D) Board [1997] AATA 67

April 9th, 2014

This application was brought pursuant to s 39T of the Industry Research and Development (IR&D) Act 1986 to review a decision made under s 39L, which was confirmed on review pursuant to subsection 39S(4), the hearing of a proceeding relating to a reviewable decision must take place in private and the applicant will be referred to as “Confidential”.


  • Since 1985, it has been asserted, in principle, that R&D activities involving the creation of new knowledge or innovation could be substantiated by demonstrating the presence of either quality in the outcome of an R&D project.

  • The commissioner of taxation determined that “Confidential’s” R&D activities contained all elements required by the definition of eligible R&D activities were present, except for the requirement of innovation or technical risk.

  • The decision under review concerns a software development project undertaken by “Confidential” during the years of income ended 31 December 1990, 1991 and 1992.

  • The predominant reason for the conclusion that “Confidential’s” project failed to come within the meaning of R&D was its failure to exhibit the necessary degree of innovation or technical risk, and therefore the activities were not R&D in the sense required by Part IIIA of the IR&D Act.

  • The IR&D Board took the view that in order to constitute “innovation” in the requisite sense, an activity must have an “appreciable degree of novelty”.


The decision under review is set aside and the matter is remitted to the respondent with the direction that the applicant is entitled to a favourable certificate under s 39L of the Industry Research and Development (IR&D) Act 1986.

Click here to view the Confidential and Industry Research and Development Board [1997] AATA 67 (6 March 1997) Case.