ARTICLE · 17 NOVEMBER 2020

AAT Finding Reaffirms Documentation Is Essential For R&D

Johnson Winter & Slattery

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The Administrative Appeals Tribunal's recent decision in Royal Wins Pty Ltd and Innovation and Science Australia AATA 4320 reinforces that it is important taxpayers appropriately document a hypothesis prior to commencing research and development activities.

AustraliaTax

Kathryn Bertram

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The Administrative Appeals Tribunal's (AAT) recent decision in Royal Wins Pty Ltd and Innovation and Science Australia (ISA) [2020] AATA 4320 reinforces that it is important taxpayers appropriately document a hypothesis prior to commencing research and development (R&D) activities. The hypothesis must involve a degree of uncertainty that is formulated for the purposes of being validated or invalidated through the conduct of experiments. This case highlights that documentation for R&D needs to be contemporaneous and should follow a systematic progression of work in order to satisfy the legislative criteria. It also shows the importance of obtaining relevant expert evidence. If the AAT is only presented with evidence from one expert, it is more likely to accept that unopposed evidence.

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