Moreton Resources Ltd and Industry Innovation and Science Australia (Taxation)

This matter concerned an appeal by Moreton Resources Ltd (the Applicant) against a decision by Industry Innovation and Science Australia (the Respondent) regarding the registration of certain research and development activities. The dispute centred on whether activities registered as "Supporting R&D Activities" for the 2014 income year, specifically "project management and administration" and "environmental rehabilitation and planning," were directly related to registered "Core R&D Activities" from previous income years. The case was before the Administrative Appeals Tribunal (AAT) on remittal from the Federal Court.

The primary legal issue before the AAT was to determine whether the registered Supporting R&D Activities for the 2014 year were directly related to registered Core R&D Activities of previous income years, as required by the relevant tax legislation. This involved a factually intensive exercise, including an examination of whether activities registered in earlier years, particularly 2010, qualified as "core R&D activities," and if so, whether the subsequent activities were undertaken for the dominant purpose of supporting those core activities. The court's previous decision noted the need to consider whether certain activities were conducted during the registration year.

The Federal Court had remitted the matter to the AAT for a redetermination of all relevant questions of fact and law, finding it inappropriate to make the necessary factual findings itself due to the complexity and intensity of the factual inquiry required. The AAT was directed to consider all tendered evidence, including evidence from the first tribunal hearing and a second statement by Mr. Melik, and rejected objections to this evidence, stating that the tribunal is not bound by strict rules of evidence and that personal perspectives of company executives can inform factual findings regarding purposes and relationships between activities. The AAT also addressed the Respondent's contention that the Applicant had abandoned certain arguments regarding activities in the 2012, 2013, and 2014 years, with the Applicant disputing this limitation.

The decision of the Federal Court was to set aside the previous decision of the Tribunal and remit the matter back to the Tribunal for determination according to law. The AAT's role was to re-examine the facts and apply the law, considering all evidence and arguments presented, including the Applicant's continued contention that activities in the 2012 year were a continuation of core R&D activities from the UCG pilot project.