Havilah Resources Ltd and Innovation and Science Australia (Taxation)

The Administrative Appeals Tribunal considered a dispute between Havilah Resources Ltd and Innovation and Science Australia concerning claims for the research and development (R&D) tax offset. Havilah sought to claim the offset for activities undertaken in relation to its mining projects, specifically at Kalkaroo and Maldorky. The core of the dispute revolved around whether these claimed activities qualified as "core R&D activities" under Division 355 of the *Income Tax Assessment Act 1997* (Cth).

The legal issues before the Tribunal were whether the hydrogeological drilling, sampling, pumping tests, groundwater modelling, and geotechnical investigations undertaken by Havilah constituted "core R&D activities" as defined by the Act. Crucially, the Tribunal had to determine if these activities fell within the exclusions provided in section 355-25(2) of the Act, specifically those relating to prospecting, exploring, or drilling for minerals, and activities associated with complying with statutory requirements or standards. The Tribunal was also required to consider the meaning of "experimental activities," "deposits," and "new knowledge" in the context of Havilah's claims.

The Tribunal found that the activities undertaken by Havilah did not qualify as core R&D activities. It reasoned that the drilling, sampling, and modelling involved standard and routine hydrogeological and geotechnical investigations. These activities were found to fall within the exclusion in section 355-25(2)(b) for prospecting, exploring, or drilling for minerals, as well as the exclusion in section 355-25(2)(f) for activities associated with complying with statutory requirements or standards necessary for mining development. Consequently, as the claims for core R&D activities failed, any claims for supporting R&D activities, which are defined as being directly related to core R&D activities, also necessarily failed.

The Tribunal affirmed the decisions under review, meaning Havilah's claims for the R&D tax offset for the disputed activities were not allowed.