Moreton Resources Limited v Innovation and Science Australia [2019] FCAFC

July 25th, 2019 R&D tax

This matter has been appealed to the Federal Court.


A recent decision has been handed down by the Full Federal Court in the case Moreton Resources Limited v Innovation and Science Australia [2019] FCAFC 120. The decision is still subject to appeal however shows clarification in disputes with existing R&D technology at new sites.


A previous AAT decision in September 2018 had determined that R&D Activities registered by Moreton Resources Limited were not R&D Activities in accordance with the legislation, and in agreement with a previous finding by AusIndustry.

Various activities were undertaken between FY12 and FY14 in relations to the underground coal gasification technology in Kingaroy Queensland. The project was unsuccessful when the pilot gas broke causes underground contamination. The activities were registered by Moreton Resources to the ISA as “core R&D activities” or “supporting R&D activities” in order to claim the R&D Tax Benefit Offset in the corresponding financial years.

Moreton Resources’ activities were originally registered with the ISA however under further investigation were deemed to be ineligible as they were not core or supporting R&D activities as they do not satisfy the purpose of the ITAA97.

In September 2018, the Tribunal and the ISA’s internal review concluded that many of Moreton’s activities did comply with statutory requirements.


The federal court has handed down a judgment setting aside the AAT’s decision and noting that, in the Federal Court’s view, the AAT erred in its construction of the legislation definition of “core R&D activities” contained in s 355-25(1) of the ITAA 1997.

The Federal court also noted that whilst Moreton Resources had been successful in the overall outcome of the appeal, the company had not been successful in its contention that this Court should itself determine whether the registered “core R&D activities” for the 2012 to 2014 years constituted “supporting R&D activities”.


Within Moreton Resources’ submissions during the appeal, the company had requested that should the Federal Court set aside the AAT decision, that the AAT should also subsequently determine whether the registered activities were eligible. The Federal Court however determined that it would be inappropriate for the Federal Court to undertake this exercise (requiring close examination of factual matters) and that the appropriate course is for the matter to be remitted to the AAT for determination according to law.

Click here to view the Moreton Resources Limited v Innovation and Science Australia case.

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