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  • On 28 October 2020, the Administrative Appeals Tribunal (AAT) handed down its decision in the matter of Royal Wins Pty Ltd v Innovation and Science Australia. The AAT affirmed the decision of ISA that all of the Applicant’s claimed activities were not eligible R&D activities.
  • The AAT decision confirms the importance of maintaining contemporaneous documentation. The Tribunal acknowledged that while industrial research and development would not necessarily follow the same path as that undertaken in a university setting, it is an essential aspect of the systematic progression of research and development applications that there be adequate documentary evidence. What is required is documentary evidence of the application of a scientific method in a systematic progression of work from hypothesis to experiment, observation and evaluation, followed by logical conclusions.
  • The AAT’s decision supports the department’s position that applicants are required to demonstrate that claimed R&D activities are compliant with the requirements of s355-25(1).
  • The decision provides a clear indication that the Tribunal is not willing to accept a statement of commercial objective as a hypothesis; and emphasises the importance for applicants to provide clear, contemporaneous evidence demonstrating that they have followed the systematic progression of work required by section 355-25 of the ITAA 1997 in the relevant years.

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