Last decade, there were a number of R&D Tax Disputes heard by the courts with the majority of decisions seeming to find in favour of the regulators that claims (most of which were large) were not eligible.
The original Federal Court decision in 2019 regarding Moreton Resources Ltd and Industry Innovation and Science Australia was big news at the time, since it represented one of the few matters where a decision was ruled even partially in favour of a taxpayer.
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, however in 2019 the Federal Court set aside the AAT’s 2018 decision and noted 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 remitted the matter back to the AAT in 2019.
On 21 September 2022, the Administrative Appeals Tribunal (AAT) handed down its decision in Moreton Resources Ltd and Industry Innovation and Science Australia and publicly released its decision on 11 November 2022.
The AAT found that, except for 3 activities, Moreton’s activities in the 2012, 2013 and 2014 years supported core R&D activities they conducted in 2010.
AusIndustry’s website notes that the department on behalf of IISA is currently considering this decision and will provide further information shortly.
The 2022 AAT decision appears to be at least a partial win for Moreton Resources Ltd, and we are currently reviewing its details.
This case also highlights the importance of documenting and assessing activities in accordance with programme regulator guidance to minimise the likelihood of ending up in costly dispute with the regulators.
You can find our previous reportings on the case here