The recent AAT decision, Vision Intelligence Pty Ltd and Innovation Australia  AATA 527 was a taxation appeals case that related to a taxpayer’s calculation of expenditure items within its R&D tax claim submission and the possible penalties the ATO may impose on that taxpayer for recklessness in the calculation.
This case is relevant to companies that wish to reassess their ‘risk profile’ and ‘reasonable care’ position with respect to the R&D Tax Incentive.
The AAT concluded that the R&D expenditure was not incurred and issued a 25% penalty for lack of ‘reasonable care’ taken during the R&D tax claim process.
The Tribunal also found that the advice received from two external experts during the R&D tax claim process could not be used to evidence ‘reasonable care’ by the Applicant.
Deputy President Deutsch made specific reference to the fact that the first R&D tax advice lacked ‘independence’ as it was on a success basis. Further, the Applicant’s second advice could not demonstrate ‘reasonable care’ as it was general in nature and drafted after the lodgement of the tax return.
There is now precedent that in an R&D tax matter, a ‘reasonable care’ position may only occur by utilising the services of an independent R&D tax agent, where:
Swanson Reed recommends that any R&D tax claimant follow the processes highlighted in this case where it desires an independent due diligence of its current or future claims.
To view the full case, click here