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.
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.
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:
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.