Home » News » H2O Exchange Pty Ltd v Innovation and Science Australia [2021] FCA 11 (22 January 2021)

H2O Exchange Pty Ltd v Innovation and Science Australia [2021] FCA 11 (22 January 2021)

February 8th, 2021

Introduction

In October 2019 a decision was reached by the AAT in the matter of H2O Exchange Pty Ltd and Innovation and Science Australia.

The matter related to dispute of a previous decision by Innovation and Science Australia (AusIndustry) finding that Activities registered under the R&D Tax Incentive were not in accordance with the legislative requirements.

Background

The disputed project registered related to the development of an online platform for the cross-border trading of water entitlements and allocations, that could react to changes (legislative, trade induced) in real-time.

AAT Decision

The AAT upheld AusIndustry’s finding that the R&D Activities were not eligible, since the outcome of the activities were not unknown, and could have been readily deduced on the basis of available knowledge.

The R&D Entity subsequently sought to appeal the matter to the Federal Court, and an order was made by the court on 22 January 2021.

For an appellant entity to be successful in an appeal of a decision of the AAT, they must be able to satisfy the Federal Court that the AAT has erred on a question of law, as occurred in the previous Moreton Resources R&D case. The Federal Court’s order references the grounds of appeal by H2O Exchange as being:

“1: The Tribunal’s decision was irrational and illogical in accepting expert evidence.
2: It was a denial of natural justice to make the presence or absence of research involving AI a relevant issue in the proceeding without advising the parties that that approach would be taken and giving them an opportunity to deal with it.
3: It was a denial of natural justice for the Tribunal to proceed with the review when it became evident during the review proceeding that the appellant had filed an application to vary the relevant registration definitions and that the respondent had failed to deal with the variation request.”

H2O Exchange was unable to satisfy the Federal Court that the AAT had erred in respect of each of the three grounds of appeal raised, and the appeal was dismissed.

Learnings from Decision

This case again highlights the importance of documenting and assessing activities in accordance with programme regulator guidance.

Click here to view the H2O Exchange Pty Ltd and Innovation and Science Australia case.

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 Trustindex verifies that the original source of the review is Google.  I have been using Swanson Reed for my clients for more than a decade.  Having a specialist firm that can provide practical and commercial advice that produces real outcomes is very important and we have received great feedback from our clients. Highly recommended.
  
 
 
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 Trustindex verifies that the original source of the review is Google.  
  
 
 
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 Trustindex verifies that the original source of the review is Google.  The Swanson Reed team have provided our company with exceptional professional advice and assistance for all of our R&D claims for many years - have always achieved great results with excellent value for their services.
  
 
 
      Posted on Google  
   
   Payam Toloo  
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 Trustindex verifies that the original source of the review is Google.  Damian Smyth and his team are very helpful, supportive and experts in their field of R&D Tax claims. I'm always happy with the work they do and been a customer of their for over 5 years.
  
 
 
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 Trustindex verifies that the original source of the review is Google.  The Team at Swanson Reed are very experienced R&D Tax Advisors and gave us ongoing support with all of our R&D Claims, the consultants ensured we were always working with current legislative guidelines, gave us assistance with compiling technical and government documentation and went out their way to ensure they were with us for the entire process from beginning to end.  Highly recommended to anyone who needs assistance with working through what can at times be a daunting process.
  
 
 
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   Gary Watson  
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 Trustindex verifies that the original source of the review is Google.  We can highly recommend Swanson and Reed as an R & D accountant. We have worked with them for several years now as they make our R & D claim so easy and communicate quickly with both us and our accountant.
  
 
 
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H2O Exchange Pty Ltd v Innovation and Science Australia [2021] FCA 11 (22 January 2021)

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H2O Exchange Pty Ltd v Innovation and Science Australia [2021] FCA 11 (22 January 2021)

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