In its most recent case involving R&D Tax matters, the Administrative Appeals Tribunal (AAT) has again highlighted the importance of keeping evidence when conducting R&D activities.
In Ultimate Vision Inventions Pty Ltd and Innovation Science Australia, the AAT held that simply pursuing an innovative idea will not in itself meet the R&D eligibility criteria and provided further guidance on the evidence that may be needed to support an R&D Tax Incentive claims, including:
- Evidence that supports registered activities as they are described
- Evidence that demonstrates that R&D activities actually meets the eligibility criteria, including:
o The purpose of conducting R&D activity was to generate new knowledge
o R&D activities followed a scientific method and a hypothesis was formulated based on scientific principals
o That it was necessary to undertake an experiment in order to determine the outcome of the activities
Ultimate Vision Inventions Pty Ltd was unable to substantiate that it created and new knowledge as a result of activities that were conducted or that the outcome of the registered activities could not be known or determined in advance on the basis of current knowledge, information or experience. The AAT further reiterated that any review by the ATO or AusIndustry is limited to registered activities as they are described in the R&D application for registration.
View full details of the AAT decision.
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