Real Energy Corporation Limited provides update on the status of Innovation Australia R&D Dispute

March 16th, 2020

  • Within its recently released half yearly report, Real Energy Corporation Limited (ASX: RLE) has provided an update on the status of the company’s dispute with AusIndustry/ISA over eligibility of its R&D Activities;
  • The company had previously received an adverse finding for the company’s R&D Tax Registrations during the FY14, FY15 and FY16 periods, with corresponding tax offsets in dispute totalling around $7.2M. Further potential unpaid R&D Tax offsets of around $6.5M are at stake for the FY17 to FY19 periods
  • RLE has appealed the adverse findings to the Administrative Appeals Tribunal (AAT) as was previously reported to the market in May 2019.
  • The company’s half yearly report released on 13 March 2020 has noted the following additional developments in the matter:
    • RLE still considers that the recent Federal Court judgement of Moreton Resources Limited v Innovation and Science Australia (finding in favour of the R&D Entity) supports RLE’s understanding of the law in respect of the R&D Tax Incentive eligibility criteria, and that the activities in dispute were indeed R&D Activities;
    • ISA has recently requested a stay on the AAT proceedings for a period of 6 months;
    • RLE believes its activities are in accordance with the criteria, and believes that the AAT case would not be heard until 2021 at the earliest;
  • The above is a timely reminder that R&D Claims are subject to regulator scrutiny, and that companies should consider guidance material published by AusIndustry and the ATO on R&D Tax Compliance when assessing claims.

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