Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2022] FCA 606
File number(s):
VID 836 of 2019
Judgment of:
WHEELAHAN J
Date of judgment:
24 May 2022
Catchwords:
ADMINISTRATIVE LAW – appeal under s 44 of the Administrative Appeals Tribunal Act 1976 (Cth) from a decision of the Administrative Appeals Tribunal which affirmed a decision that activities claimed to have been undertaken by the applicant did not satisfy the definition of R&D activities for the purpose of s 355-20 of the Income Tax Assessment Act 1997 (Cth) – where the Tribunal’s written reasons were in significant part adopted without attribution from the respondent’s written submissions to it – whether unattributed adoption of the respondent’s submissions demonstrates failure to undertake an independent review generally or specifically in relation to particular matters – whether administrative justice must appear to have been done – no jurisdictional error.
ADMINISTRATIVE LAW – whether arguments and evidence advanced by the applicant to the Tribunal were mandatory considerations that were not considered by the Tribunal – claims and assertions about factual matters made by the applicant are not properly characterised as mandatory considerations – whether the Tribunal ought to have sought further evidence from the applicant in the exercise of the Tribunal’s inquisitorial functions, or notified the applicant that its evidence was insufficient – the Tribunal undertook a permissible assessment of the submissions and evidence and made findings of fact on the relevant issues – in the circumstances, there was no obligation on the Tribunal to make further enquiries – no jurisdictional error.
ADMINISTRATIVE LAW – where the applicant made an application that the Tribunal hear claims for the 2014, 2015 and 2016 financial years together and where the Tribunal refused to include the 2016 year – whether the Tribunal failed to take into account a mandatory consideration, denied the applicant procedural fairness or acted unreasonably in excluding the 2016 year from the review – no such errors demonstrated.
Legislation:
Administrative Appeals Tribunal Act 1975 (Cth) ss 2, 2A, 2A(b) and (c), 2A(d), 6 and 7, 8(3), 11, 13, 30, 32(1), 33(1A), 33(1AA), 33(1AB), 33(2) and 2(A), 35, 39, 42A(5)(b), 43(1) and (2), 43(2B) and 44
Income Tax Assessment Act 1997 (Cth) ss 355-1, 355-5, 355-20, 355-25, 355-25(1), 355-25(1)(a), 355-25(1)(a)(ii) and (b), 355-30, 355-30(1), 355-35 and 355-705(1)
Industry Research and Development Act 1986 (Cth) ss 6, 27A, 27A(3), 27B and 27C, 27F(1), 27J, 27J(1), 27J(1)(c)(iii), 27K and 27L, 29, 30A, 30D and 30E
Industry Research and Development Amendment (Industry Innovation and Science Australia) Act 2021 (Cth), s 3
Tax Laws Amendment (Research and Development) Bill 2010 (Cth)
Commonwealth of Australia, Parliamentary Debates, Senate, 3 June 1975
Income Tax Rates Amendment (Research and Development) Bill 2010, Explanatory Memorandum
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2022] FCA 606
Case
[2022] FCA 606
Decision Date
CaseChat Overview and Summary
Ultimate Vision Inventions Pty Ltd (Applicant) appealed against a decision of the Administrative Appeals Tribunal (AAT), which affirmed a decision that the Applicant's activities did not satisfy the definition of Research and Development (R&D) activities for the purpose of section 355-20 of the Income Tax Assessment Act 1997 (Cth). The Applicant sought to have the AAT review its claims for the 2014, 2015 and 2016 financial years together. The AAT refused to include the 2016 year in the review, and the Applicant challenged this decision. The Applicant argued that the AAT failed to undertake an independent review, did not consider mandatory considerations, and did not provide procedural fairness by excluding the 2016 year from the review. The Applicant also argued that the AAT's adoption of the respondent's submissions without attribution demonstrated a failure to undertake an independent review.
The court considered whether the AAT's adoption of the respondent's submissions without attribution demonstrated a failure to undertake an independent review, whether the AAT failed to consider mandatory considerations, and whether the AAT denied the Applicant procedural fairness by excluding the 2016 year from the review. The court held that the AAT's adoption of the respondent's submissions without attribution did not demonstrate a failure to undertake an independent review, as the AAT undertook a permissible assessment of the submissions and evidence and made findings of fact on the relevant issues. The court also held that the Applicant's claims and assertions about factual matters made to the AAT were not properly characterised as mandatory considerations, and that there was no obligation on the AAT to make further enquiries. Finally, the court held that there was no error in the AAT's decision to exclude the 2016 year from the review, as the Applicant's application to include the 2016 year was made late, and the Applicant had not demonstrated that the exclusion of the 2016 year from the review resulted in a failure of administrative justice.
The appeal was dismissed, and the Applicant was ordered to pay the respondent's costs of the proceeding, including reserved costs, unless the Applicant filed and served written submissions on costs by a specified date.
Orders
Orders of the court
1. The appeal is dismissed.
2. The applicant may file and serve any written submissions on costs, not exceeding two pages, by 4.00 pm on 31 May 2022.
3. If the applicant files and serves written submissions in accordance with order 2, the respondent may file and serve written submissions in response, not exceeding two pages, by 4.00 pm on 7 June 2022.
4. Subject to further order, the question of costs will then be determined on the papers.
5. If the applicant does not file and serve written submissions in accordance with order 2, then it is ordered that the applicant shall pay the respondent’s costs of the proceeding, including reserved costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
At a telephone directions hearing before the Tribunal conducted on 14 September 2018, the applicant sought to have the review of the decisions for the 2014 and 2015 years heard together with a review of the respondent’s decision in respect of the 2016 year. Mr Mark Nicolau set out in his affidavit affirmed 8 December 2020 his account of what occurred at the directions hearing on 14 September 2018 –9.At the hearing, amongst other things, I recall that I asked the Tribunal to include the review of the Respondent’s decision in respect of the 2015/2016 year. I made submissions to the Tribunal setting out 6 points as to why the Tribunal should include the Respondent’s 2015/2016 year’s decision in its review. I made submissions to the Tribunal based upon notes that I had with me, which stated as follows:“Why Should the Tribunal include an external review of the Respondent’s R&D decision in the 2015/16 year?1.BECAUSE the UVI Application for Review to the Tribunal on 9 March 2017 was in respect of three years that is the RD incentives for the years ended 30 June 2014 30 June 2015 and 30 June 2016.2.BECAUSE: the R&D decisions in each year that are the subject of our Application for review arise out of the RD activities into the development of the Health and Fitness System Application.3.BECAUSE: UVI’s complaints and application to review in respect of each year arise from the same facts relating to the conduct and decisions of the Respondent. Each of the years raise common questions of law or fact.4.BECAUSE: reviewing all three years is necessary to ensure that all questions in the proceeding are effectively and completely determined and decided upon5.BECAUSE: it is just and convenient and in the interests of justice to determine the issues in respect of all three years in one proceeding rather than having UVI commence separate proceeding which may not even be possible in respect of 2015/16.6.We did not know until about three weeks ago on 20 August 2018 that a review decision had been made in the 2015/16 year. That does not change the fact that our Application for Review to the Tribunal sought a review of the RD decision for the 2015/16 year.10.I recall that Counsel for the Respondent said that the Respondent opposed the inclusion of the decision in the 20152016 year in the review.11.The Tribunal agreed with the Respondents position(Emphasis in original.) Mr Nicolau’s account was not challenged, and is not inconsistent with the account of the solicitor for the respondent, Ms Rebekha Pattison, in her affidavit of 26 October 2020 –73The parties appeared for a directions hearing on 14 September 2018 before Member Maryniak QC. Ms Melanie Baker of Counsel appeared for the Respondent, instructed by myself. The Member decided that the Applicant would not be allowed to rely on the evidence of Mr Surdut in the absence of a witness statement. The parties then agreed that the Applicant could rely upon the Third Mark Nicolau Statement despite the late service.74The parties also discussed the 2015/16 income year during that directions hearing. The Member decided that the 2015/16 income year was not a part of the Application for Review before the Tribunal.
Ratio Decidendi
Legal Principle Established
The key provision of the IR&D Act for present purposes is s 27J –Findings about a registration(1)The Board may make one or more findings to the following effect about an R&D entity’s registration under section 27A for an income year (the registration year):(a)that all or part of a registered activity was a core R&D activity conducted during the registration year;(b)that all or part of a registered activity was not an activity of a kind covered by paragraph (a);(c)that all or part of a registered activity was a supporting R&D activity conducted during the registration year and in relation to:(i)one or more specified registered core R&D activities; or(ii)one or more specified core R&D activities for which the entity has been registered in an earlier income year; or(iii)one or more specified core R&D activities yet to be conducted for which the entity could be registered in the registration year if those activities were conducted during the registration year; or(iv)several specified core R&D activities, each covered by subparagraph (i), (ii) or (iii);(d)that all or part of a registered activity was not an activity of a kind covered by paragraph (c).Note 1:A finding is reviewable (see Division 5).Note 2:The Board could make a finding under paragraph (b) if, for example, the Board has insufficient information to make a finding under paragraph (a). Similarly, the Board could make a finding under paragraph (d) if it has insufficient information to make a finding under paragraph (c).(2)If the Board makes a finding under subsection (1) in relation to the R&D entity’s registration, the Board may specify in the finding the times to which the finding relates.Example:A finding under paragraph (1)(a) could specify the times during the registration year that a registered activity was a core R&D activity.(3)This section has effect subject to section 32B (findings cannot be inconsistent with any earlier findings). The effect of s 27J is that the Board may make findings as described in paragraphs (a), (b), (c), or (d) of sub-section (1) in respect of registered activities. For example, if an activity is registered for a particular income year, the Board may make a finding pursuant to paragraph (a) that the activity was a “core R&D activity” and that it was conducted during the income year. By way of further example, if an activity is registered for a particular income year, the Board may make a finding pursuant to sub-paragraph (c)(ii) that the activity was a “supporting R&D activity” conducted in the income year, in relation to one or more specified “core R&D activities” for which the entity was registered in an earlier income year. In addition, under s 27J(1)(c)(iii), the Board could make a finding that all or part of a registered activity was a supporting R&D activity conducted during the registration year in relation to “one or more specified core R&D activities yet to be conducted for which the entity could be registered in the registration year if those activities were conducted during the registration year”. If activities were registered as “core R&D activities”, the Board could nevertheless find that they were “supporting R&D activities” pursuant to paragraph (c).