Rix’s Creek Pty Limited; Bloomfield Collieries Pty Limited and Innovation Australia

This matter concerned appeals by Rix’s Creek Pty Limited and Bloomfield Collieries Pty Limited against decisions of Innovation Australia regarding claims for research and development activities under the *Income Tax Assessment Act 1936* (Cth). The core dispute revolved around whether the activities undertaken by the applicants qualified as "research and development" as defined by section 73B(1) of the Act, specifically concerning the elements of innovation, technical risk, and whether the activities were systematic, investigative, and experimental.

The court was required to determine if the claimed activities, including the testing of a refined waste oil and diesel mix for explosives at Rix’s Creek and the design, development, and testing of a DMS device at Bloomfield Collieries, met the statutory definition of research and development. This involved assessing whether the activities involved innovation or high levels of technical risk, were systematic and investigative, and whether the purpose of any non-core activities was directly related to the carrying on of core research and development activities. The sufficiency of the evidence provided by the applicants to substantiate their claims was also a key consideration.

The court applied the principles established in *Mount Owen*, holding that for non-core activities to qualify, they must be carried on for a purpose "directly related" to the carrying on of core research and development activities, requiring a direct and close relationship. In relation to Rix’s Creek, the court noted a lack of documentary evidence for laboratory testing and the informal nature of board approval. For Bloomfield, the court considered the evidence regarding the DMS device, including the progression of prototypes and the nature of the trial and testing activities. The court found that the applicants had not sufficiently demonstrated that their claimed activities met the criteria for research and development under the Act.

Ultimately, the court affirmed the decisions under review, finding that the applicants had not discharged the onus of proving that their claimed activities constituted research and development as defined by the legislation. The court also addressed a request for pseudonyms for mine sites and witnesses, determining that such an order was not necessary or appropriate in the circumstances.