On 12 September 2018, Moreton Resources Ltd announced on the ASX that the Administrative Appeals Tribunal (AAT) recently affirmed a decision by Innovation and Science Australia (ISA) that registered R&D activities were not eligible. This was decided on the basis that underground coal gasification is a known and proven technology and is therefore not considered a research and development activity, as defined by the 1997 Income Tax Assessment Act.
The AAT have issued an amended assessment for $9M. Moreton Resources Ltd are considering their options and may appeal the decision. They will make this decision over the next few weeks but at this stage, it seems likely. If the company does appeal, the debt would be payable 21 days following the outcome of an adverse Appeals hearing in the Federal Court. The matter may take months, or even years, to conclude. The company will look to minimise the cost to the business.
The result of the decision is a timely reminder that R&D Claims are being heavily scrutinised and companies should ensure their activities are thoroughly assessed.
For further information on the Tribunal decision, click here.