Ultimate Vision Inventions Pty Ltd and Industry, Innovation and Science Australia (Taxation)
[2025] ARTA 1813
•17 September 2025
Ultimate Vision Inventions Pty Ltd and Industry, Innovation and Science Australia (Taxation) [2025] ARTA 1813 (17 September 2025)
Applicant/s: Ultimate Vision Inventions Pty Ltd
Respondent: Industry, Innovation and Science Australia
Tribunal Number: 2017/1319, 2018/6110
Tribunal:General Member C. Willis
Place:Melbourne
Date:17 September 2025
Decision:The Tribunal affirms the decisions under review.
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General Member C. WillisCatchwords
TAXATION – research and development tax incentive – design, development and evaluation of digital health and fitness management system – whether whole of project approach is appropriate – whether evidence of R&D activities being conducted as registered – whether core R&D activities conducted – whether supporting R&D activities conducted – whether experimental activities – whether outcome of activities could be known or determined in advance – whether systematic progression of work based on principles of established science – whether activities conducted for purpose of generating new knowledge – decisions under review affirmed
Legislation
Income Tax Assessment Act 1997 (Cth), Division 355, sections 355-5, 355-20, 355-25, 355-205, 355-210Industry Research and Development Act 1986 (Cth), sections 27A, 27J, 27L, 30D, 30E
Cases
Absolute Vision Technologies Pty Limited and Innovation and Science Australia (Taxation) [2022] AATA 2319
Active Sports Management Pty Ltd v Industry Innovation and Science Australia [2024] FCA 1346
John W Blackman v Commissioner of Taxation [1993] FCA 345
Body by Michael Pty Ltd and Industry Innovation and Science Australia [2025] ARTA 44
Coal of Queensland Pty Ltd v Innovation and Science Australia [2021] FCAFC 54
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Industry Research and Development Board v Coal & Allied Operations Pty Ltd [2000] FCA 979
Moreton Resources Limited and Innovation and Science Australia [2019] FCAFC 120
Ultimate Vision Inventions Pty Ltd and Innovation and Science Australia (Taxation) [2019] AATA 1633
Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2022] FCA 606
Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2023] FCAFC 23Secondary Materials
Explanatory Memorandum to Tax Laws Amendment (Research and Development) Bill 2010 (Cth)
Statement of Reasons
INTRODUCTION
Ultimate Vision Inventions Pty Ltd (the Applicant) registered certain activities (the ‘Activities’[1]) relating to the development of a Health and Fitness System (the ‘HFS’) with Industry, Innovation and Science Australia (the Respondent) in relation to the financial or income years ended 30 June 2014, 30 June 2015 and 30 June 2016 (collectively the ‘Relevant Years’).
[1] In this decision the term ‘Activity’ or ‘Activities’ is used to refer to an activity or activities as initially registered under section 27A of the IRD Act upon application by the Applicant, whether or not it was subsequently determined that they were ‘R&D Activities’ as defined for the purposes of that Act.
Registration of research and development activities with the Respondent under the Industry Research and Development Act 1986 (Cth) (‘IRD Act’) is a pre-condition to accessing taxation incentives under Division 355 of the Income Tax Assessment Act 1997 (‘ITAA 1997’).
The Respondent subsequently decided that none of the activities put forward by the Applicant in any of the Relevant Years qualified for registration. The Applicant sought internal review by the Respondent of their decisions, and when the Respondent affirmed their initial decisions the Applicant sought review by the Tribunal.
The Applicant first sought review of the Respondent’s decisions by the Tribunal in March 2017. The Tribunal undertook a review of the Respondent’s decision relating to the 2014 and 2015 Years (the ‘First Tribunal’ and ‘First Tribunal Proceeding’). The First Tribunal affirmed the Respondent’s decisions as they related to those years.[2]
[2] Ultimate Vision Inventions Pty Ltd and Innovation and Science Australia (Taxation) [2019] AATA 1633.
The Applicant applied to the Tribunal in October 2018 for review of the Respondent’s decision relating to the 2016 Year.
The Applicant appealed[3] the decision of the First Tribunal to the Federal Court, which in turn affirmed the decision of the First Tribunal (the ‘Federal Court Decision’).[4]
[3] This is more correctly described as the Federal Court exercising its original jurisdiction.
[4] Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2022] FCA 606 per Wheelahan J.
The Applicant then appealed the Federal Court Decision to the Full Court of the Federal Court. The Full Court allowed the Applicant’s appeal and remitted the matter back to the Tribunal (the ‘Full Court Decision’).[5]
[5] Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2023] FCAFC 23 per Thawley, McElwaine and Hespe JJ.
On 20 June 2023 the Tribunal made directions for the application for review relating to the 2016 Year to be linked to and heard together with the applications for the 2014 and 2015 Years.
These proceedings commenced in the former Administrative Appeals Tribunal (‘AAT’) which was established under the Administrative Appeals Tribunal Act 1975 (Cth). On 14 October 2024, the AAT became the Administrative Review Tribunal (‘the Tribunal’), as established by and subject to the Administrative Review Tribunal Act 2024 (Cth) (the ‘ART Act’). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the ‘Transitional Act’), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review associated with these applications not already completed by the AAT.
This decision and statement of reasons is made by the Tribunal. For ease of reference, when referring to processes conducted by either the AAT or the Tribunal in relation to these applications, the term ‘the Tribunal’ has been used.
RELEVANT LAW
The reviewable decisions of the Respondent are made under the IRD Act and these decisions are the focus of this proceeding. However, these decisions were made in the wider context of taxation incentives sought by the Applicant under the ITAA 1997 and the IRD Act draws on definitions contained within the ITAA 1997. The Commissioner of Taxation is bound by certain findings made under the IRD Act. It is therefore appropriate to set out the broader statutory regime arising under both pieces of legislation.
Tax offsets for R&D activities
An entity that is an ‘R&D entity’ may be entitled to a tax offset for ‘R&D activities’. These offsets may generate a refund of tax to the entity in certain circumstances. The R&D entity must have one or more notional deductions under Division 355 to obtain a tax offset. Notional deductions include expenditure incurred on R&D activities: section 355-1.
The objects of Division 355 are set out in section 355-5 as follows:
(1)The object of this Division is to encourage industry to conduct research and development activities that might otherwise not be conducted because of an uncertain return from the activities, in cases where the knowledge gained is likely to benefit the wider community.
(2)This object is to be achieved by providing a tax incentive for industry to conduct, in a scientific way, experimental activities for the purpose of generating new knowledge or information in either general or applied form (including new knowledge in the form of new or improved materials, products, devices, processes or services).
An R&D entity includes a body corporate incorporated in Australia under an Australian law: paragraph 355-35(1)(a).
‘R&D activities’ are ‘core R&D activities’ or ‘supporting R&D activities’: section 355-20.
Subsection 355-25(1) provides that:
(1)Core R&D activities are experimental activities:
(a)whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:
(i) is based on principles of established science; and
(ii)proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and
(b)that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).
Subsection 355-25(2) sets out activities that are taken not to be R&D activities, including market research, market testing or market development.
‘Supporting R&D activities’ are activities directly related to core R&D activities: subsection 355-30(1).
Section 355-100 sets out rules for an R&D entity’s entitlement to a tax offset for an income year by reference to the extent it is able to deduct certain amounts in that income year, including deductions for R&D expenditure under section 355-205.[6]
[6] Subsection 355-100(1) sets out other types of deductions related to research and development that may give rise to a tax offset, but only R&D expenditure is relevant in the present matter.
Subsection 355-205(1) provides that an R&D entity can deduct for an income year ‘expenditure it incurs’ during that year to the extent that the expenditure:
(a)is incurred on one or more ‘R&D activities’:
(i)for which the R&D entity is registered under section 27A of the IRD Act for an income year, and
(ii)that are activities to which section 355-210 applies,[7] and
(b)if the expenditure is incurred to the R&D entity’s ‘associate’, is paid to that associate during the present year (that is, the relevant income year).
[7] An R&D activity covered by one or more of the paragraphs in subsection 355-210(1) will be an activity to which section 355-210 applies.
The Commissioner of Taxation is the entity with responsibility for the general administration of the ITAA 1997.
Registration of activities under the IRD Act
For the purposes of the IRD Act the terms ‘R&D activities’, ‘core R&D activities’, ‘supporting R&D activities’, ‘R&D entity’ and ‘income year’ have the same meaning as in the ITAA 1997: section 4 of the IRD Act.
Section 27A of the IRD Act provides that:
(1)The Board must, on application by an R&D entity, decide whether to register or refuse to register the entity for either or both of the following for an income year:
(a)one or more specified activities as core R&D activities conducted during the income year;
(b)one or more specified activities as supporting R&D activities conducted during the income year.
For each activity registered as a ‘supporting R&D activity’ for an income year, the registration must also specify one or more activities as the corresponding ‘core R&D activities’. If any of those specified core R&D activities are not registered for the R&D entity for the same income year, then the registration must also specify the income year for which the core R&D activity was registered: subsection 27A(3).
Section 27D sets out the requirements for applications for registration. An application to register activities under section 27A for an income year must be in the approved form, accompanied by the fee (if any) specified in the regulations and be made within the time period set out in the provision.
The Respondent may request the applicant to give further information about their application: section 27E.
The Respondent may conduct an examination of all or part of an R&D entity’s registration under section 27A for an income year for the purposes of making one or more findings under subsection 27J(1): subsection 27F(1). The Respondent may examine an R&D entity’s registration on its own initiative, and must examine an R&D entity’s registration if requested by the Commissioner of Taxation or where the R&D entity has applied for findings to be made under subsection 27J(1) about its registration: subsections 27F(2), (3).
During an examination of an R&D entity’s registration the Respondent may request the entity to provide information about the entity’s registration: section 27H.
Under subsection 27J(1) the Respondent may make one or more findings about an R&D entity’s registration under section 27A for an income year as follows:
·That all or part of a registered activity was (or was not) a core R&D activity conducted during that year.
·That all or part of a registered activity was (or was not) a supporting R&D activity conducted during that year and in relation to one or more specified core R&D activities.[8]
[8] Those core R&D activities may have been registered or conducted at different times as set out in paragraph 27J(1)(c).
Note 2 to subsection 27J(1) says that the Respondent could make a finding that all or part of a registered activity was not a core R&D activity or a supporting R&D activity where it had insufficient information to make a positive finding that all or part of a registered activity was a core R&D activity or a supporting R&D activity.
The Respondent must notify the R&D entity and the Commissioner of Taxation of any findings under subsection 27J(1) about the entity’s registration under section 27A: subsection 27K(1). This notice must include a certificate for each finding, containing the matters set out in subsection 27K(2).[9] The notice and certificate may also set out other matters.
[9] These matters include a description of the finding, the Respondent’s reasons for the finding and the effect of the finding on the entity’s registration.
While a finding under subsections 27B(1) or 27J(1) is in force, the R&D entity’s registration under section 27A is taken to have always existed in a form consistent with the finding: subsection 27L(1). That is, the effect of the finding is to automatically vary the entity’s registration (if the finding is different to the existing registration) and that variation is retrospective. This is the case for the purposes of both the IRD Act and the ITAA 1997: subsection 27L(3).
An entity affected by a ‘reviewable decision’ made under the IRD Act may ask the Respondent to conduct an internal review of that decision under section 30D, and an entity affected by any resulting internal review decision may seek external review by the Tribunal[10] under section 30E.
[10] At the time that the Applicant sought external review under section 30E the reference was to the former Administrative Appeals Tribunal, since replaced by this Administrative Review Tribunal.
A finding made about a registration of activities under subsection 27J(1) is a reviewable decision for these purposes: item 7 of the Table in section 30A.
The Respondent is the entity with responsibility for the administration of the IRD Act.
KEY EVENTS, CORRESPONDENCE AND COMMUNICATIONS
Although the factual background to this proceeding has been set out in extensive detail in the First Tribunal Decision and the Federal Court Decision, it is necessary for this Tribunal to provide its own description of key events, actions and correspondence and documents, which inform its decision.
The Applicant is an Australian company which was incorporated in July 2012 and named Ultimate Vehicle Imports Pty Ltd until the change to its present name in June 2016.[11] Since its incorporation the sole director and shareholder of the Applicant has been Mr Werner Nicolau (‘Mr Nicolau Junior’).
[11] The Applicant conducted a vehicle importing business for approximately six months after it was established: see paragraph 9 of Applicant’s Consolidated SFIC.
The Respondent is a statutory body established under section 6 of the IRD Act. Amongst other roles, it has oversight functions relating to the Australian Government Research and Development Tax Incentives (‘R&DTI’) program.
The Commissioner of Taxation also has administrative and other functions arising from the R&DTI program. Broadly the R&DTI program provides tax offsets under the ITAA 1997 for entities which conduct research and development activities recognised by IRD Act. The particular functions of each of these regulatory bodies and the legislative provisions under which they operate are described in greater detail below under the heading ‘Relevant Law’.
The Applicant entered into a Service Agreement dated 1 July 2013 (‘Service Agreement’)[12] with a ‘research service provider’ (‘RSP’) called Akyman Investments Pty Ltd (‘Akyman’). An RSP is a specialist entity that is registered with the Department of Industry, Innovation and Science to undertake research and development work on behalf of, or under contract to, other entities.[13]
[12] B.8.4. Unless stated otherwise, documents are identified by the reference given to them in the Tribunal Book dated 3 February 2025 as filed by the Respondent in this proceeding.
[13] See for example the description of RSPs at >
Akyman is also an Australian incorporated company. The founder and director of Akyman is Mr Mark Nicolau (‘Mr Nicolau Senior’), who is the father of Mr Nicolau Junior.
The Health and Fitness System and initial registration with the Respondent
The Applicant described the HFS as follows:
The Health and Fitness System is a complex product integrating artificial intelligence algorithms and decision support systems (DSS) search engines, with secure cloud computing technology, user interfaces for data collection from the user and fitness and nutrition calorie measurement devices, and more.[14]
[14] See paragraph 2 of the Applicant’s submissions.
On 1 July 2014 the Applicant lodged an ‘Application: Registration of R&D Activities’ with the Respondent for the income period from 1 July 2013 to 30 June 2014 (the ‘2014 Year’).[15] The form was submitted online, with an online declaration by Mr Nicolau Junior as director of the Applicant. The information submitted by the Applicant included the following:
[15] G.2.6.
(a)The ‘Project Title’ was ‘UVI001 Design and Development of an integrated Health and Fitness program and Cloud based Decision Support Systems’.
(b)The ‘R&D Activities’ listed were:
(i)1.1 – Design of Fitness management algorithms for calorie consumption measurement
(ii)1.1.1 – Supporting
(iii)1.2 – Design of Health management algorithms for calorie intake measurement
(iv)1.2.1 – Supporting
(v)1.3 – Conceptual design and evaluation of a potential implementation of Cloud based Decision Support Systems.
(c)The ‘Objectives of the project’ were described as:
UVI’s idea is to merge traditional dietary programs with fitness programs and with personal wellbeing programs which with the help of technology advances will capture monitor and report the key parameters of interest to end users, dieticians and fitness trainers within a non-collision framework. The proposed system will take into consideration that the XXI century has seen an explosion in the number of deaths caused by obesity, high blood pressure and static human behaviour. Too much TV in the XX century was replaced by too much surfing on the WEB and physical isolation of the Facebook lovers. The lack of physical activity was combined with the access to super affordable soft drinks and fast food products and with the increased costs of natural food products.
The specific technical objectives for the project are
1.design and development of a set of Fitness monitoring algorithms to calculate consumption of calories caused by physical exercises;
2.design and development of a set of Health control algorithms to calculate intake of calories from foods and beverages;
3.design and development of a set of Cloud based Decision Support Systems to prevent the collision of dietary and fitness programs with the user’s defined personal wellbeing objectives, personal health and fitness status.
(d)In response to a request to ‘Describe the new knowledge intended to be produced by the core activities (i.e. experiments) in this project’ and to ‘Explain how it is different from current knowledge’ the Applicant stated:
This project aims to generate new knowledge in the form of patentable decision making applications within community shared computing Clouds:
a.evaluation of various data capture devices used in conjunction with gym equipment;
b.conceptual design of data capture devices capable to calculate the amount of calories consumed as a result of various physical exercises within confined (gyms, home assigned areas, etc and open spaces (ie pools tracks fields courts etc).
c.conceptual design of decision support systems capable to prevent health hazards caused by incorrect merging of health and fitness programs within end users personal objectives and health status (ie post surgery, heart bypass, diabetes etc).
The specific new knowledge that the project aims to provide solutions to the existing paradigm where both, fitness and health programs operate independently without taking into consideration the damaging results of their integration.
1.Mobile applications - the project aims to develop mobile Health& Fitness applications on the existing range of mobile operating system platforms (Android, BlackBerry, Windows 8 and iOS) and to provide complementary PC based support applications for dieticians and fitness trainers;
2.Mathematical algorithms - the project aims to develop a set of mobile phone based algorithms which match end user's personal objectives with existing health and fitness programs;
3.Cloud computing - the projects aims to develop a set of Cloud based decision support systems capable to prevent which will ensure that the personal fitness and health objectives do not collide with the recommended health and fitness programs made available on the WEB by expert individuals and organizations within the health and Fitness Industries.
(e)In response to a request to ‘Explain how the outcome of the core activities in the project could not have been known or determine [sic] in advance on the basis of current knowledge, information or experience’ the Applicant stated:
We will define a set of algorithms which will calculate the intake of calories and the consumption of calories based on the above hypothesis and, through careful observation, evaluate the results of the experiments in order to implement a set of algorithms to calculate the loss or gain of calories with the most accurate results.
The yet unknown outcome of these algorithms will be compared against existing statistical information collected by the Health and Fitness Industries and be applied within the personal framework goals and objectives defined by the end user.
The aleatory nature of the amount of calories received from food and beverages intake and the amount of calories consumed as a result of various fitness exercises must be combined with the personal information of the individual in order to prevent health of body damages and achieve personal goals.
For example the height remains constant more or less after the age of 21. At the same time the people can only get older but the weight can either decrease or increase. For accuracy these constants and variations should be entered either manually or automatically in the H&F APP during an active H&F program.
(f)The Applicant confirmed that some or all of the project was contracted to an RSP.
(g)The overall project expenditure was $461,500, expenditure on core R&D activities was $396,500, expenditure on supporting R&D activities was $60,000 and total expenditure on the R&D activities registered in the 2014 Year was $456,500.
(h)In his online declaration Mr Nicolau Junior affirmed that the information provided in the application was ‘true and correct and accurate’, that the activities and expenditure described had met the eligibility requirements for the R&DTI and that the R&D entity had maintained records while the activities were undertaken that substantiated their being conducted.
Each core R&D activity was then identified and described by reference to the ‘hypothesis’ of experiments to be conducted, the ‘experiments’ carried out, the ‘observation of results’ of those experiments and the ‘conclusion’. The services provided by the RSP for each activity were also set out. In considering the evidence of both lay and expert witnesses in this matter it will be necessary to return to those descriptions. Due to their volume, these descriptions have been set out in Annexure A to this decision.
Similarly each supporting R&D activity was described and an explanation provided of how it contributed to supporting core activities. Again, due to the length of these descriptions they have been set out in Annexure A.
On 3 July 2014 the Respondent advised the Applicant that registration of the R&D activities described in the application for the 2014 Year had been approved.[16] However the Respondent also advised that this registration did not of itself make the activities eligible for the R&DTI. In addition to self-assessment by the R&D entity, the Respondent might choose to examine a registration in detail resulting in a formal finding about the eligibility of some or all of the activities.
[16] G.1.6.
On 1 July 2015 the Applicant lodged an online ‘Application: Registration of R&D Activities’ with the Respondent for the income period from 1 July 2014 to 30 June 2015 (the ‘2015 Year’).[17] The information submitted by the Applicant included the following:
[17] G.2.15.
(a)The ‘Project Title’ was the same as that stated for the 2015 Year.
(b)The ‘R&D Activities’ listed were:
(i)1.1 – Improvements of Fitness monitoring algorithms and Multi-level Search Engine
(ii)1.1.1 – Supporting
(iii)1.2 – Improvements of Diet monitoring algorithms and Multi-level Search engine
(iv)1.2.1 – Supporting
(v)1.3 – Improvements of Cloud based anti-collision systems with “smoothing” algorithms
(vi)1.3.1 – Supporting
(c)The ‘Objectives of the project’ were described as:
UVI’s idea is to create a computerized system capable to identify and integrate suitable dietary programs with fitness programs within the context of personal objectives and health safety restrictions in order to guide end users in building self-learning intelligent wellbeing health and fitness programs in a timely and cost effective manner.
The specific technical objectives stated in the initial phase of the project have been broadened in terms of functionality as a result of the test results of our initial hypothesis. The broadened technical objectives for the project are:
1.Improvements of Fitness monitoring algorithms and multi-layered search engine taking into consideration of new variables which influence the calories burned;
2.Improvements of Diet monitoring algorithms and multi-layered search engine taking into consideration of new variables which influence the calories intake (consumed);
3.Improvements of Cloud based anti-collision Decision Support Systems with “smoothing” of user’s personal wellbeing objectives within the context of personal health history, health status and fitness status.
(d)In relation to ‘new knowledge’ the Applicant stated:
The purpose of this project was the development of a potentially RISK FREE solution for the existing Health & Fitness paradigm where fitness and health programs operate independently without taking into consideration the damaging results of their integration within the user’s health history, health and fitness status and personal wellbeing objectives.
The new knowledge generated by the project is reflected in the self-learning/ self-adjusting (artificial intelligent) fitness and health algorithms and search engines and in the Cloud based non-collision decision support systems.
These two sets of algorithms are the main components of the proposed health and fitness system development and after an in-depth industry survey we have found no such knowledge was available in the public arena.
It should be noted that without experimenting in a systematic and progressive manner the various deterministic factors of the dietary and fitness programs search engines and anti-collision algorithms could not be predicted or determined by experts.
(e)In relation to how the outcome of the core activities could not have been known in advance the Applicant stated:
We have approached industry experts such as medical practitioners, dietitians and fitness trainers to determine if our hypothesis was already known or could have been proven without the need for a systematic progressive work by such professionals.
We have also research the WEB to find health and fitness programs which take into consideration the health and fitness status of the prospective users and cross relate to each other.
No such programs or information was available and we have embarked in defining a set of algorithms to combine existing methods of calculation of the intake and the burning of calories to test various combinations of such proven formulas. Through careful observation and evaluation of the results of the experiments we have identified various deterministic factors which will improve these algorithms in terms of accuracy and speed.
The yet unknown outcome of these improved algorithms will be compared against existing statistical information collected by the Health and Fitness Industries and be applied within the personal framework of health information, goals and objectives defined by the end user The unpredictable nature of the amount of calories received from food and beverages intake and the amount of calories consumed as a result of various fitness exercises must be combined with the personal information of the individual in order to prevent health of body damages and achieve personal goals.
(f)The expenditure on core R&D activities was $250,000, expenditure on supporting R&D activities was $60,000 and total expenditure on the R&D activities registered in the 2015 Year was $310,000. Overall project expenditure was $750,000.
(g)Mr Nicolau Junior again completed an online declaration for the 2015 Year confirming the accuracy of the information provided in the application and confirming that substantiating records were maintained.
Descriptions of the core R&D activities and supporting R&D activities for the 2015 Year are also set out in Annexure A to this decision.
On 13 July 2015 the Respondent advised the Applicant that registration of the R&D activities described in the application for the 2015 Year had been approved.[18] However the Respondent again advised that this registration did not of itself make the activities eligible for the R&DTI, and that the Respondent might examine a registration in detail resulting in a formal finding about the eligibility of some or all of the activities.
[18] G.1.25.
On 1 July 2016 the Applicant lodged an online ‘Application: Registration of R&D Activities’ with the Respondent for the income period from 1 July 2015 to 30 June 2016 (the ‘2016 Year’).[19] The information submitted by the Applicant included the following:
[19] G.2.21.
(a)The ‘Project Title’ was the same as that stated for the 2014 Year and 2015 Year.
(b)The ‘R&D Activities’ listed were:
(i)1.1 – Core 1: Development and testing of Cloud based emulations of payment applications using POE, IKM and tokenisation methods.
(ii)1.1.1 – SUPPORT 1: Development and testing of several mobile payment applications.
(iii)1.2 – Core 2: Development and testing of Cloud based decision support systems and artificial intelligence (‘AI’) engines for integrated health and fitness programs.
(iv)1.2.1 – SUPPORT 2: Development and testing of a range of health fitness mobile applications.
(c)The ‘Objectives of the Project’ were described as:
The key objectives of the project were to resolve the limitations of the Health & Fitness architecture developed to date in terms of security and Cloud based remote processing by investigating the following paths:
1.Protection of critical information exchanged over non-secure networks of mobile devices and host computer nodes using Cloud based Secure Elements and Tokens.
2.Design, implement and test a set of decision support systems and artificial intelligent modules to ensure the that fitness enthusiasts and also patients are provided with safe and adequate health and fitness programs but also with strict monitoring and control of drug prescriptions.
(d)In relation to ‘new knowledge’ the Applicant stated:
The specific purpose of the core activities was to generate new knowledge in the following areas:
1.Development of a generic security solution capable of protecting critical information such as personal data, payment details and fitness and health activities passing through non-secure networks of mobile devices and host computer nodes using Cloud based Secure Elements and Tokens. Since existing solutions have security vulnerabilities resolved by us.
2.Development of a Risk Free novelty solution for an integrated Health & Fitness program including but not limited to diet, fitness and drug consumption monitoring and control, employing a set of decision support systems and artificial intelligent modules which provide anti-collision and algorithm smoothing functionality, such integrated has never been done before.
(e)In relation to how the outcome of the core activities could not have been known in advance the Applicant stated:
Individuals and members of the Health Industry organizations such as hospitals, medical practitioners and health insurance firms are concerned with the protection of individuals’ medical information stored and exchanged between the parties. To provide medical information to authorized parties in a simple and cost effective manner while at the same time protecting such information against hackers attacks require the unprecedented level of security provided by our Cloud based solution.
The enhancement of our initial H&F solution covering the integration of Dietary and Fitness programs with another 2 essential components; Drug consumption monitoring and Payments required further changes to our Cloud based solution since the protection of payment cards processing (reading, writing) raised the same level of security concerns as encountered by the protection of medical records.
It was not know if the removal of security requirements from mobile devices and intermediary network nodes such as host processors can be replaced by the provision of security only, at the Cloud level, using a combination of Point-over-End Implicit key management and Tokenisation of critical information.
Further, we had to determine if cloud based security could also be applied to non-payment applications such as health & fitness which require either equal or a higher levels of information security.
(f)The expenditure on core R&D activities was $300,000, expenditure on supporting R&D activities was $36,000 and total expenditure on the R&D activities registered in the 2015 Year was $336,000. Overall project expenditure was $1,000,000.
(g)Mr Nicolau Junior again completed an online declaration for the 2016 Year confirming the accuracy of the information provided in the application and confirming that substantiating records were maintained.
Descriptions of the core R&D activities and supporting R&D activities for the 2016 Year are also set out in Annexure A to this decision.
On 5 July 2016 the Respondent advised the Applicant that registration of the R&D activities described in the application for the 2016 Year had been approved.[20] However the Respondent again advised that this registration did not of itself make the activities eligible for the R&DTI, and that the Respondent might examine a registration in detail resulting in a formal finding about the eligibility of some or all of the activities.
[20] G.2.22.
Review by the Respondent
In early 2015 the Respondent[21] conducted a ‘Desk Review’ of the Applicant’s compliance with the requirements for the R&DTI in relation to the activities set out in its 2014 Year registration for application. In a report dated 26 March 2015[22] the Respondent referred to an apparent departure by the Applicant from its previous automotive import business which raised a concern about the ‘genuineness’ of the project.[23] One of the signatories to this report was Dr Jessie Hiu Kiu whose position title was ‘Customer Service Manager.’ The Desk Review identified a number of questions, describing as ‘unclear’ whether the claimed core R&D activities were experimental, employed the scientific method or generated new knowledge, and stating that appropriate records had not been kept. A lack of evidence or substantiating documentation was identified. It was also indicated that the outcome of the core activities could have been known or determined in advance. However the Desk Review was satisfied with other matters, such as the relationship of the supporting activities to core activities. At that time it was rated as having a ‘high risk’ of non-compliance and progression to an ‘Activity Review’ was recommended.
[21] At that time the Respondent was referred to by the name AusIndustry.
[22] G.1.16.
[23] At this time the Applicant was still called ‘Ultimate Vehicle Imports’ and its website reflected this name.
On 4 June 2015 representatives of the Respondent (including Dr Hiu Kiu) met with Mr Nicolau Junior to discuss the Applicant’s registration for R&D tax incentives for the 2014 year. Following that meeting the Respondent wrote to the Applicant on 9 July 2015[24] noting that the Applicant’s registration had been rated as having a ‘medium risk of non-compliance with the requirements of the [R&DTI] program’ and although further compliance assessment was not anticipated at that time the Applicant had been ‘flagged for review’ upon its next registration submission.
[24] G.1.23.
In particular the Respondent noted:
The registration was assessed as medium-risk due to the following concerns:
·Certain experiments were not designed based on principles of scientific method. For example, assessment of the relevance of temperature to calorie consumption was not controlled and tested on multiple test subjects. The credibility and reliability of the experiment was not demonstrated.
·As the software development part of the project is still in its conceptual state, there is no hard evidence yet to suggest core activities were experimental activities.
An Activity Review file note prepared by the Respondent following the meeting with the Applicant noted that the HFS project was still in its infancy, that the Applicant had proven that it had ‘done background research and had developed a product idea’, that the ‘experimental part’ of the project was yet to be performed and that work done to test certain parameters was ‘non-scientific’. However the Respondent indicated that work involved with computer software ‘might be valid based on principles of computer science’ and that independent research conducted by the Respondent’s assessor suggested that new knowledge could be generated. In relation to record-keeping the Respondent’s assessor observed that the Applicant was keeping documentation although much of the material was literature research, market research, project conceptual idea and program functional specifications. On the basis that the project was still at the design stage and experimental activities had not yet commenced, the recommendation was that there be a further review at the Applicant’s next registration.[25] The Respondent also noted that it had provided the Applicant with information about other programs within the department which might provide support.
[25] G.1.24.
On 23 February 2016 the Respondent wrote to the Applicant to advise that it was commencing a formal examination of the Applicant’s registrations for the 2014 and 2015 Years, involving an assessment of the claimed Activities for those years. The outcome of this examination would be the issue of a certificate to the Commissioner of Taxation as to whether the Activities were R&D Activities as defined for the purposes of the ITAA 1997.[26]
[26] G.1.32.
The Respondent’s letter stated that the Australian Taxation Office had referred the Applicant to the Respondent for compliance action based on a concern of the Commissioner of Taxation that the Activities may not include Core R&D Activities and that Activities did not take place in Australia. The Respondent had therefore been requested to advise what research and development was being undertaken, by whom, for whom, and where. The Respondent’s letter outlined information that the Applicant was required to provide within 30 days for this examination.
The Applicant provided a bundle of information in response under cover of letter dated 21 March 2016. The Applicant affirmed its commitment to assisting the Respondent with its examination, but set out at length complaints about perceived harassment and bullying of the Applicant by the Commissioner of Taxation.[27]
[27] G.1.33.
The Applicant and Respondent met in September 2016. In correspondence exchanged between the parties before this meeting the Respondent explained that the purpose of the meeting was different to the Activity Review meeting which occurred in April 2015, and that the examination process would be more exhaustive. Unlike the Activity Review which gave rise to a ‘risk assessment’, the examination process was likely to lead to a formal finding about the eligibility of the Activities for the 2014 and 2015 Years.[28]
[28] G.1.44. At this time the Activities for the 2016 Year were not under review.
A file note prepared by the Respondent of the meeting indicated that Mr Nicolau Senior and Mr Nicolau Junior attended for the Applicant, together with a Customer Service Manager and the Acting Assistant State Manager of the Respondent. A range of issues relating to the Activities and the HFS are noted as having been discussed, together with the Applicant’s concerns about the Commissioner of Taxation being raised. There was discussion about the timeframe for completion of the HFS being extended due to unexpected complexities with the work. The Applicant indicated that it had a dietician and general practitioner assisting them with the development of the application, and the general practitioner would be involved in testing the app on their patients by early 2017. Mr Nicolau Junior identified a ‘smaller app’ relating to dosing reminders to patients having been identified and this was the subject of work in the 2016 Year.[29]
[29] G.1.47.
The Respondent issued a certificate under section 27J of the IRD Act dated 19 October 2016 finding that none of the Activities registered by the Applicant for the 2014 and 2015 Years were Core R&D Activities or Supporting R&D Activities (the ‘2014 and 2015 Initial Decision’).[30] The effect of these findings was that those Activities were taken as not having been registered. A copy of the certificate was provided to the Commissioner of Taxation who was then bound by the Respondent’s findings. Also annexed to the Respondent’s certificate was a ‘Description of Activities for Finding’ which set out a summary of the Applicant’s description of the relevant Activities.
[30] G.1.52. The Respondent notified the Applicant of its decision on 3 November 2016: G.1.54. This correspondence also noted the ability of the Applicant to seek a review of the decision under Division 5 of the IRD Act. A further email was sent to the Applicant on 7 November 2016 explaining the process for an internal review.
The specific findings set out in the certificate were as follows:[31]
[31] G.1.52.
(a)In relation to Core Activities 1.1 to 1.3 for the 2014 year, the Applicant had not demonstrated that the registered Activities were core R&D activities conducted during the 2014 year. The Applicant had not:
(i)Clearly specified technical hypotheses for those Activities.
(ii)Demonstrated that those Activities were experimental activities undertaken for the purpose of generating new knowledge. The information provided did not demonstrate that the Applicant undertook a systematic progression of work, or that data was collected, analysed and evaluated in accordance with principles of established science.
(iii)Demonstrated that the outcome of those Activities could not be known or determined in advance on the basis of current knowledge, information or experience.
(b)In relation to Core Activities 1.1 to 1.3 for the 2015 year, the Applicant had not demonstrated that the registered Activities were core R&D activities conducted during the 2015 year. The Applicant had not:
(i)Clearly specified technical hypotheses for those Activities.
(ii)Demonstrated that those Activities were experimental activities undertaken for the purpose of generating new knowledge. The information provided did not demonstrate that the Applicant undertook a systematic progression of work, or that data was collected, analysed and evaluated in accordance with principles of established science.
(iii)Demonstrated that the outcome of those Activities could not be known or determined in advance on the basis of current knowledge, information or experience.
(c)As no eligible core R&D activities had been identified in any year, those Activities were also not eligible as supporting R&D activities directly related to a core R&D activity.
(d)In relation to Supporting Activities 1.1 to 1.3 for the 2014 year and Supporting Activities 1.1 to 1.3 for the 2015 year, the Applicant had not demonstrated that any registered Activities claimed as ‘supporting’ are a supporting R&D activity to any core R&D activity because they did not have a direct, close and relatively immediate relationship to any eligible core R&D activity in any year, as there were no eligible registered core R&D activities (as per the previous findings).
The Applicant wrote to the Respondent seeking a reconsideration of the 2014 and 2015 Initial Decision on 8 November 2016. It said that the Respondent’s findings were incorrect for reasons which included:[32]
(a)The Respondent not having taken into account the six volumes of reference materials provided by the Applicant in relation to the 2014 and 2015 Years, as well as the detailed explanations provided by the Applicant during its meeting with the Respondent in September 2016.
(b)The Respondent not having taken account of what it described as the ‘Compliance Assessment result’ provided by Dr Jessie Hiu Kiu in July 2015.[33]
(c)The Commissioner of Taxation having made false allegations about the Applicant performing activities overseas to justify its compliance request to the Respondent. The Applicant reiterated its previous complaints about the behaviour of the Commissioner of Taxation.
[32] G.1.57.
[33] The Applicant had apparently understood Dr Hiu Kiu as having indicated that the Respondent was satisfied with the Activities for the 2014 Year, even if registrations for later years might need to be reconsidered.
On 22 November 2016 the Respondent emailed the Applicant to confirm that an officer had been allocated to conduct the internal review, explain the internal review process and request further information from the Applicant.[34]
[34] G.1.63.
On 5 December 2016 the Applicant emailed a bundle of materials to the Respondent in support of its request for reconsideration of the Respondent’s findings.[35]
[35] G.1.64.
On 3 March 2017 the Respondent wrote to the Applicant confirming the 2014 and 2015 Initial Decision under section 30D of the IRD Act (the ‘2014 and 2015 Review Decision’).[36] Included with this correspondence was a further certificate which largely restated the previous findings, but added the following:
[36] G.1.68. Annexed to the Respondent’s findings was a ‘Description of Activities’ setting out the Applicant’s description of relevant Activities responding to the Respondent’s previous findings of November 2016.
(a)In relation to Core Activities 1.1 to 1.2 for the 2014 and 2015 years:
(i)There was no evidence to support that the progression of work involved evaluation of a specific technical problem that causes uncertainty in the outcomes of the experiment, or reaching a logical conclusion about accepting or rejecting a specific hypothesis about that scientific or technical problem.
(ii)The claimed hypothesis and progression of work failed to meet the legislative requirements as the information provided did not describe an eligible experimental process.
(b)In relation to Core Activity 1.3 for the 2014 and 2015 years:
(i)The hypothesis described a product requirement. There was no evidence that the activity went beyond integrating third party programs into a new product.
(ii)There was no evidence to support that the progression of work involved evaluation of a specific technical problem that causes uncertainty in the outcomes of the experiment, or reaching a logical conclusion about accepting or rejecting a specific hypothesis about that scientific or technical problem.
(iii)The claimed hypothesis and progression of work failed to meet the legislative requirements as the information provided did not describe an eligible experimental process.
The Respondent advised the Applicant that it could apply to the Tribunal for a review of the 2014 and 2015 Review Decision under Division 5 of the IRD Act.
Also on 3 March 2017 the Respondent notified the Applicant of its decision about the Applicant’s registration for the R&DTI for Activities relating to the 2016 Year (the ‘2016 Initial Decision’).[37] Again, a certificate was provided by the Respondent setting out its findings that all of the Activities for that year were neither core R&D activities nor supporting R&D activities. Therefore those Activities were taken as not having been registered.
[37] G.1.69. Annexed to the Respondent’s findings was a ‘Description of Activities for Finding’ which set out a summary of the Applicant’s description of and observations in relation to the relevant Activities.
The findings of the Respondent were as follows:
(a)In relation to Core Activity 1.1:
(i)The hypothesis described a series of tests. There was no evidence that the Activity went beyond testing or modifying a known technology and incorporating it in the product.
(ii)The Applicant had not demonstrated that the Activity was an experimental activity undertaken for the purpose of new knowledge, and had not demonstrated that the outcome of the Activity could not be known or determined in advance on the basis of current knowledge, information or experience.
(iii)There was no evidence to support that the progression of work involved evaluation of a specific technical problem that caused uncertainty in the outcomes of the experiment, or reaching a logical conclusion about accepting or rejecting a specific hypothesis about that scientific or technical problem.
(iv)The claimed hypothesis and progression of work failed to meet the legislative requirements as the information provided did not describe an eligible experimental process.
(b)In relation to Core Activity 1.2:
(i)The hypothesis described a product requirement and there was no evidence that the Activity went beyond integrating generic programs into a new product.
(ii)There was no evidence to support that the progression of work involved evaluation of a specific technical problem that caused uncertainty in the outcomes of the experiment, or reaching a logical conclusion about accepting or rejecting a specific hypothesis about that scientific or technical problem.
(iii)The claimed hypothesis and progression of work failed to meet the legislative requirements as the information provided did not describe an eligible experimental process.
(c)In relation to Activities 1.1.1 and 1.2.1, the evidence showed that those Activities were not supporting R&D activities. Those Activities did not have a direct, close and relatively immediate relationship to any experimental activity that constituted a core R&D activity.
The Applicant wrote to the Respondent seeking a reconsideration of the 2016 Initial Decision on 25 April 2017.
By letter dated 31 October 2017 to the Applicant the Respondent confirmed the 2016 Initial Decision under section 30D of the IRD Act (the ‘2016 Review Decision’).[38] Included with this correspondence was a further certificate which largely restated the previous findings.
[38] B.7.10. Annexed to the Respondent’s findings was a ‘Description of Activities’ setting out the Applicant’s description of relevant Activities and observations responding to the Respondent’s previous findings.
First Tribunal Proceeding
On 9 March 2017 the Applicant lodged an application with the Tribunal for review of the 2014 and 2015 Review Decision and the 2016 Initial Decision. The Applicant said these decisions were wrong because:
(a)The Respondent had disregarded its July 2015 audit report for the 2014 Year. (This appears to be a reference to the Respondent’s letter of 9 July 2015 advising the outcome of the Activity Review).
(b)The Respondent’s decision delegate failed to understand the innovative nature of the Applicant’s HFS project. The Respondent had time constraints for its review and limited technical expertise.
(c)The Respondent disregarded the Applicant’s arguments. The Respondent disregarded its own audit processes. It did not perform a further audit before disallowing the Activities for the 2016 Year.
(d)The Commissioner of Taxation had used false allegations to request the Respondent commence another audit for the 2014 and 2015 Years. (This appears to be a reference to the examination conducted by the Respondent in 2016).
(e)The Applicant believed that the Respondent’s decision delegate had acted under pressure from the Commissioner of Taxation, to strengthen the Commissioner of Taxation’s case against the Applicant on related tax matters. This was an abuse of power which had adversely affected the Applicant’s business and Mr Nicolau Junior’s life.
The Applicant had sought review of the Respondent’s findings for all of the Relevant Years, however at the time of applying to the Tribunal it had not sought an internal review by the Respondent of the 2016 Initial Decision. The 2016 Initial Decision was not a reviewable decision for the purposes of the Tribunal.[39]
[39] See sections 30A and 30E of the IRD Act.
As set out above, the Applicant did subsequently seek an internal review by the Respondent of the 2016 Initial Decision in April 2017, and the Respondent made the 2016 Review Decision dated 31 October 2017. The Applicant made a further application to the Tribunal dated 31 October 2017 relating to the 2016 Review Decision.[40]
[40] G.2.2.
There was some debate in the First Tribunal Proceedings about when the Applicant had been provided with the 2016 Review Decision by the Respondent, together with other evidentiary and procedural issues. The solicitor acting for the Applicant at the time of its initial application to the Tribunal ceased to act around June 2017, with a different firm of solicitors being retained who then also ceased to act for the Applicant around April 2018. The matter had been listed for a hearing in May 2018 but these dates were vacated.[41] By the time that the matter was heard, over three days in October and November 2018, the Applicant was self-represented with Mr Nicolau Senior and Mr Nicolau Junior presenting the Applicant’s case and cross-examining the expert witnesses.
[41] A more detailed discussion of these issues and events is contained at paragraphs [46] to [65] of the decision of Wheelahan J arising from the Applicant’s appeal to the Federal Court under section 44 of the AAT Act of the decision in the First Tribunal Proceeding.
Mr Nicolau Senior and Mr Nicolau Junior gave evidence on behalf of the Applicant and were cross-examined by the Respondent. The Applicant filed a witness statement and supplementary witness statement of Mr Nicolau Junior dated 16 November 2017 and 7 August 2018[42] respectively, and a witness statement, supplementary witness statement and further supplementary witness statement of Mr Nicolau Senior dated 16 November 2017, 17 May 2018 and 30 July 2018 respectively.[43]
[42] B.7.2, B.5.1.
[43] B.2.1, B.3.1, B.4.1.
The Respondent filed written reports prepared by two expert witnesses (‘Expert Reports’), Dr Deborah Kerr and Dr Jean-Guy Schneider.[44]
[44] The two experts each filed initial Expert Reports dated 7 March 2018, and supplementary Expert Reports dated 6 August 2018, at C.2, C.3, C.4, C.5.
Directions were made in the First Tribunal Proceeding to the effect that the 2016 Review Decision and matters relating to the Activities for the 2016 Year would not be part of that proceeding.[45]
[45] A summary of the hearing in the First Tribunal Proceeding is contained in paragraphs [88] to [96] of the decision of Wheelahan J.
The First Tribunal affirmed the 2014 and 2015 Review Decision on 27 June 2019 (the ‘First Tribunal Decision’), finding that:
(a)None of the Activities registered by the Applicant for the 2014 and 2015 Years constituted core R&D activities conducted by or on behalf of the Applicant.
(b)In the absence of finding any core R&D activities, it was not necessary to consider whether any supporting R&D activities had been conducted by or on behalf of the Applicant.
(c)It was not satisfied that any of the registered Activities had been conducted by or on behalf of the Applicant in the 2014 and 2015 Years.
Federal Court proceedings
Subsection 44(1) of the former AAT Act provided that a party to a proceeding before the Tribunal could ‘appeal’ to the Federal Court of Australia on a question of law from a decision of the Tribunal in that proceeding. In August 2019 the Applicant exercised this right. The Applicant filed an amended notice of appeal on 15 December 2020 setting out various grounds and sub-grounds of appeal in respect of which the Court identified six questions of law. One of those questions related to whether the First Tribunal had accorded the Applicant procedural fairness and a second question arose from the First Tribunal having adopted a number of the Respondent’s submissions in its decision. A third question arose in relation to whether the First Tribunal should have admitted evidence of Activities undertaken by the Applicant for the 2016 Year. A further question was whether the First Tribunal had incorrectly construed the provision which defined the term ‘core R&D activities’. Another issue was whether the First Tribunal should have taken account of the ‘totality of the product’ being developed by the Applicant. There was also the question of whether the First Tribunal had taken into account irrelevant considerations or failed to take into account relevant considerations.[46]
[46] See paragraphs [122] and [123] of the decision of Wheelahan J.
The appeal was heard in March 2021. In a decision dated 24 May 2022 Wheelahan J dismissed the Applicant’s appeal. In summary, his Honour found that the First Tribunal’s reproduction of the Respondent’s submissions in its decision did not disclose an error of law or give rise to an inference that any relevant matter had not been taken into account by the Tribunal.[47] Nor did the First Tribunal’s refusal to admit evidence of the Activities for the 2016 Year constitute a failure to take into account a relevant consideration.[48] Submissions by the Applicant that the First Tribunal failed to consider relevant matters by not having regard to the whole of the HFS project and that the First Tribunal misconstrued paragraph 355-25(1)(a) of the ITAA 1997 were also rejected.[49] Claims that the First Tribunal had made a range of errors of law and otherwise denied the Applicant procedural fairness were not upheld.[50]
[47] Ibid at [197].
[48] Ibid at [214].
[49] Ibid at [219], [225] to [226].
[50] Ibid at [229], [232] and [236].
The Applicant appealed this decision to the Full Court of the Federal Court. The Tribunal made directions that proceeding 2018/6110 relating to the 2016 Year be adjourned until resolution of the Full Court matter.
In a decision dated 2 March 2023 the Full Court allowed the Applicant’s appeal, finding that the First Tribunal had failed properly to exercise its jurisdiction to conduct the review it was required to undertake for the purposes of the AAT Act.[51]
[51] See Full Court Decision at [9] to [11] in relation to the role of the Tribunal and paragraphs [19] and [20] in relation to findings about the First Tribunal Proceeding.
The Tribunal observes that despite the Applicant’s claim in this proceeding that the Full Court of the Federal Court rejected the Respondent’s ‘absurd proposition’ relating to R&D activities undertaken by the Applicant,[52] the Full Court did not consider the issue of the Applicant’s entitlement to tax offsets under Division 355 of ITAA 1997 or the question of whether expenditure had been incurred in relation to ‘R&D activities’. The Full Court Decision related to the manner in which the Tribunal had made its decision in the First Tribunal Proceeding.
[52] See paragraph 39 of the Applicant’s opening submissions.
On the basis of its finding that the First Tribunal had not properly exercised its jurisdiction in relation to its previous decision, it was not necessary for the Full Court to consider the remaining grounds of appeal raised by the Applicant.[53] The matter was remitted to the Tribunal, to be heard by a differently constituted Tribunal. The Full Court added:[54]
The result is that it is likely to be appropriate for the issues concerning the 2014, 2015 and 2016 years to be heard together and that the evidence should not be limited to what was before the Tribunal in the present case.
[53] Full Court Decision at [2].
[54] Ibid at [21].
Remittal to the Tribunal
It is necessary for the Tribunal to record some procedural matters which arose during the hearing of the remitted matters.
On 20 June 2023 the Tribunal made directions for proceedings 2017/1319 and 2018/6110 to be linked, such that all of the Relevant Years were to be heard together by the Tribunal. Timetabling directions were made to progress the matters to a hearing after 14 October 2024. These directions encompassed the filing of further or updated Expert Reports.
In September 2024 further directions were made extending the timetable into 2025, and to allow the Applicant to file further evidence in response to a further Expert Report of Professor Schneider.
On 25 November 2024 another directions hearing was held to address the Applicant’s non-compliance with the Tribunal’s previous directions relating to the filing of submissions.
There was also discussion about the extent to which the Tribunal might have regard to transcripts or other documents relating to the First Tribunal Proceeding. Although the Tribunal was mindful of the need to manage the proceeding efficiently and avoid duplication of effort, it believed that this material should be available to the Tribunal as it was tasked with looking at the issues in contention afresh. To the extent that there were inconsistencies between evidence provided at the First Tribunal Proceeding and that given at the current Tribunal proceeding, this might be addressed by cross examination of the relevant witness or submissions. The Tribunal also had regard to section 184 of the ART Act which provides that the Tribunal may have regard to records or documents relating to a proceeding in the Tribunal prior to an appeal in the Federal Court which results in a remittal to the Tribunal.
Section 54 of the ART Act provides that for the purposes of reviewing a reviewable decision the Tribunal may exercise all the powers and discretions that were conferred on the original decision-maker. The role of the Tribunal is to make the ‘correct or preferable decision’ on the material before the Tribunal.[55] Under section 52 of the ART Act the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it considers appropriate.
[55] Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409.
Where the Federal Court allows an applicant’s appeal from a Tribunal decision and remits the matter back to the Tribunal to be heard again, the Tribunal retains its responsibility to ascertain the facts necessary for the making of the (further) decision. Subject to any orders of the court upon remittal, the Tribunal may form the view that it is appropriate to rely on findings of fact made by, or evidence that was before, the previous Tribunal. Alternatively it may decide to receive evidence afresh.[56] In the present matter the Full Court did not make specific orders relating to the extent of evidence to be considered by the Tribunal, indicating that these were questions for the Tribunal to decide. However the Full Court did observe that it was likely to be appropriate that the evidence should not be limited to what was before the First Tribunal. Having regard to the underlying reason for the Full Court’s remittal, this Tribunal has made directions and otherwise proceeded on a basis which it believes are aligned with the observations of the Full Court.
[56] John W Blackman v Commissioner of Taxation [1993] FCA 345 at [13] to [14] per Gray J.
Further directions were made by the Tribunal on 30 January 2025 in relation to the Applicant’s continued non-compliance with previous directions for the filing of submissions. The Applicant’s representative was reminded of the Tribunal’s power to dismiss an application under section 100 of the ART Act where an Applicant has failed to comply with an order of the Tribunal or otherwise proceed with their application within a reasonable time. Having regard to the significant resources invested by the Respondent and Tribunal, and mindful of the Full Court Decision to remit the matter to the Tribunal, the Tribunal was reluctant to take such a step. However the Tribunal was concerned about prejudice to the Respondent should the Applicant’s non-compliance be ongoing.
2016 YEAR ACTIVITIES AS REGISTERED[403]
[403] G.2.21.
ACTIVITY Core 1: Development and testing of Cloud based emulations of payment applications using POE IKM and tokenisation methods DESCRIPTION HYPOTHESIS OF EXPERIMENTS Our hypothesis was that by tokenising payment transactions in the same way we do for medical records we could use non secure mobile phones to perform local and international electronic fund transfers in a secure manner.
EXPERIMENTS The difficulty was in finding how to authorize and capture payment transactions from “unknown” end users’ devices and transaction processors.
• Experiment 1 determine how EFT transactions can be performed between the accounts of the same user within the same bank and between different banks.
• Experiment 2 determine how EFT transactions can be performed between the accounts of two different users within the same bank and between different banks.
• Experiment 3 determine how EFT transactions can be performed between the accounts of the same user or of two different users internationally
• Experiment 4 demonstrate how the overall system reacts to the 3 types of testing domains normal boundary and transient.UNKNOWN OUTCOME OF EXPERIMENTS OBSERVATION There was no prior known methodology to enable us or other skilled persons to predict the outcome of the experiments in advance since for the first time POE IKM and TOKENISATION were combined into a unitary CLOUD based Payment System.
EVALUATION It was determined that tokenised payments can be performed via a CLOUD based transaction processor which is known to a local bank such as a Retail Integrator or as a PayPal user or as a SWIFT client.
NEW KNOWLEDGE OUTCOME The positive outcome of this core activity was the creation of a new CLOUD paradigm POE and IKM for local and international Electronic Payments.
CONCLUSION We demonstrated that non secure devices can perform sensitive tasks such as payments in a secure manner is operating in conjunction with Cloud based token security.
ACTIVITY SUPPORT 1: Development and testing of several mobile payment applications DESCRIPTION Cloud based International payments via SWIFT
• Deposits Prior to any fund transfers the user will be required to transfer from his/her bank the intended transfer amount plus the transfer fee or a larger amount to be used for multiple transfers into GSS trust account The funds are managed by a “trusted” bank and
used for international fund transfers via SWIFT.• Withdrawals Members may withdraw at any time their funds held by GSS in the trust account since GSS maintains a realtime account balance for each member.
• Balance Enquiries Members may get at their discretion at any time their balances of their accounts held by GSS in the trust account since GSS maintains a realtime account balance for each member.
• Fund Transfers –Members will be able to transfer funds internationally to predefined overseas accounts repetitive line accounts list subject to funds availability by requesting GSS CLOUD APP to process their request under the strict security rules mentioned above.
Cloud based Local payments via PayPal
• Requesting Funds REQUEST –This function will enable the enduser to get certified value TOKENS fromthe CLOUD based Service Provider APP GSS Several certified TOKENS may coexist GSS will validate the end user credentials ID PSW and DEVICE and get the requested amount from the end user’s bank account in case the “virtual” account balance held by GSS is insufficient GSS will then send a certified value TOKEN representing the amount and flag the TOKEN as “issued”• Transferring Funds TRANSFER –APP users will be able to transfer funds value TOKENS to other APP users who will accept the funds and provide the goods or services or cash upon receiving confirmation from the GSS Service Provider that the value TOKEN certificate is valid RECIPIENT DEVICES are smart phones EFTPOS devices and ATMs GSS will validate the value TOKEN certificated and in accordance with AMLCTA act will save the transfer trace for future audit.
ACTIVITY Core 2: Development and testing of Cloud based decision support systems and artificial intelligence engines for integrated health and fitness programs DESCRIPTION HYPOTHESIS OF EXPERIMENTS Our hypothesis was that we could integrate 3 generic dietary fitness and drug prescription programs with the personal health and fitness status within the context of personal health and fitness objectives in an interactive manner within
strict safety and security regulations.EXPERIMENTS The challenge was how such a complex framework of parameters can be integrated into a safe personal wellbeing program in order to develop the decision support engines required to select the most adequate health and fitness programs and build
the artificial intelligence engines required to eliminate collision of such programs and adjust the end user’s goals and objectives within pre-determined safety boundaries.
• Experiment 1 determine how a fitness program is impacted by the other 5 programs
• Experiment 2 determine how a dietary program is impacted by the other 5 programs
• Experiment 3 determine how a medical program is impacted by the other 5 programs
• Experiment 4 demonstrate how the overall system reacts to the 3 types of testing domains normal boundary and transient.UNKNOWN OUTCOME OF EXPERIMENTS OBSERVATION After in depth research we could not find any system or known methodology to enable us or other skilled persons to predict the outcome of the experiments in advance since for the first time DIETARY and
FITNESS programs were combined with the personal HEALTH and FITNESS STATUS OBJECTIVES and PROFILE of the end user into a unitary CLOUD based Health and Fitness system.EVALUATION It was determined that the interaction of the generic and personal programs can be merged into a satisfactory level of safety through the implementation of “smoothing” of the anticollision algorithms.
NEW KNOWLEDGE OUTCOME The positive outcome of our experiments was the creation of a CLOUD based paradigm (H&F) for integrated Health and Fitness programs.
CONCLUSION We demonstrated that it was possible to integrate the 6 types of programs and resolve the safety and security problems encountered by specialised health and fitness programs available at the time on the market.
ACTIVITY SUPPORT 2: Development and testing of a range of health fitness mobile applications. DESCRIPTION Test Plan considerations.
The variable nature of the amount of calories received from food and beverages intake and the amount of calories spent as a result of various fitness exercises must be combined with the personal information of the individual Profile and HF Status.
Since we have introduced another variable in the form of Medical Prescriptions monitoring we have to rethink the Test Plan of the DSS and AI engines in order to ensure compatibility across the entire spectrum of H&F algorithms.
R&D focus – Fitness DSS algorithm
The DSS Fitness algorithm identifies the most suitable Fitness programs which fit the end-user’s Fitness Objectives within the limitations of the end user’s Personal Profile and H&F Status.
R&D focus – Diet DSS algorithm
The DSS Diet algorithm identifies the most suitable Dietary programs which fit the end user’s Health Objectives within the limitations of the end user’s Personal Profile and H&F Status.
R&D focus – Anticollision AI engine
The Anti-CollisionAI engine ensures that the Fitness and Diet programs when integrated do not exclude each other within the context of end user’s Personal Profile and HF Status
R&D focus – H&F program smoothing AI engine.
The Smoothing AI engine ensures that the end user’s Objectives are revised when all the selected fitness and Diet programs have been excluded by the Anti-Collision AI engine in order to enable the end user to participate to an H&F program within realistic Objectives
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