The Research and Development (R&D) Tax Incentive program is an initiative by the Australian Taxation Office (ATO), made to encourage companies to engage in R&D that benefits our nation. Now, thanks to a ruling by the Federal Court, companies can more readily and confidently access this program.
Under legal definition, ‘core R&D activity’ is simply summarised as ‘work that is based on principles of established science and leads to logical conclusions’ and ‘work that is conducted for the purpose of generating new knowledge’. Previous to the Federal Court’s overruling of the Administrative Appeals Tribunal’s decision on the matter, the use of known or existing technology, even in a new setting, was not considered enough to substantiate ‘new knowledge’. However, with the new court decision of Moreton Resources Ltd v Innovation and Science Australia, the Tribunal’s narrow interpretation of what constitutes ‘new knowledge’ is rendered void. While the ruling specifically relates to a gas and oil mining operation, it facilitates a clarity that now allows claimants of the R&D program to better know their eligibility.
While Innovation and Science Australia can still appeal this court decision, this case for the time being, may restore confidence in companies’ applications to the R&D Tax Incentive program. Therefore, entities who have recently applied may revisit their eligibility to the scheme.
If you are in this position or wish to revisit your eligibility to the R&D scheme, why not contact our accountants by clicking here to submit an online enquiry form or calling us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange a teleconference or appointment.