A recent AAT Decision dated 26 April 2023 (LAKES OIL NL and INNOVATION AND SCIENCE AUSTRALIA (Taxation) ) has found a company’s registered activities were not eligible under the R&D Tax Incentive.
The project under scrutiny in the case is entitled “Project 1 – LAK2006 ‘Hydraulic Fracturing Technology for Gippsland Tight Gas’”.
The dispute was focused on a registration in the FY14 and FY15 period.
During the case INNOVATION AND SCIENCE AUSTRALIA contended that:
The AAT found that the claimed activities fall within the scope of the exclusion provision for exploring, prospecting or drilling stated in section 355.25(2), and that the Claimed Activities are not core or supporting R&D activities.
The directors also released an update to the ASX on 18 April 2023 following the decision stating that:
This case again highlights the importance of documenting and assessing activities in accordance with programme regulator guidance so as to minimise the likelihood of ending up in a lengthy and costly dispute with the regulators. The AusIndustry guide to interpretation documents include guidance on how the regulators will apply the exclusion provisions in 355.25(2) ITAA97.