This matter concerns an application made by Zoffanies to the Administrative Appeals Tribunal (AAT) for the review of a decision of the Commissioner of Taxation to disallow Zoffanies objection against an Income Tax Assessment for the Substituted Accounting Period ending on 30 September 1992 (in lieu of the year ending on 30 June 1992).
Zoffanies, a subsidiary company of Macquarie Bank Ltd, claimed it was entitled to an allowable deduction of $109,947 which was part of a loss of $20,720,962 (as adjusted) incurred by Macquarie Syndication (No 3) Pty Ltd in that year of income.
The IR&D Board determined that the proposed project satisfied the definition of R&D.
The decision of the Commissioner was set aside, resulting in a win for Zoffanies.
The AAT was satisfied that the valuation of the core technology was correct.
It was held that a reasonable person would not conclude that the dominant purpose of Zoffanies and Macquarie Bank in entering the scheme was the taxation benefit.