Industry Innovation and Science Australia (IISA) is the government department responsible for determining whether companies’ activities meet the legislative criteria eligible under the R&D Tax Incentive.
The 2021-22 Annual Report for IISA was recently released, and a section of the report provides an update on legal matters and litigation relevant to the department.
When comparing the 2021-22 Annual Report with corresponding reports from preceding years, a rapid decline in the number of R&D Tax Disputes arising between companies and IISA is evident:
| Year Ended | Number of Registrations | AAT Matters Resolved | AAT judgments handed down | Current AAT Matters at Year End |
| 30 June 2022 | 12,090 | 10 | 0 | 12 |
| 30 June 2021 | 12,330 | 17 | 2 | 20 |
| 30 June 2020 | 10,544 | 26 | 4 | 28 |
| 30 June 2019 | 12,393 | 16 | 2 | 41 |
The above relates to ISA matters on activity eligibility only and not R&D Tax Disputes involving the ATO.
This reduction in litigation is despite the number of registrations not materially declining.
This decline may be attributable to a combination of:
- Changes to compliance processes by the regulators;
- Better quality of registrations submitted;
- Companies with ineligible activities refraining from participating in the programme;
Reduction in disputes is a good outcome for both companies and the regulators, and hopefully a sign of improved health of the R&D Tax Incentive overall.
Please get in touch with our office if you would like to speak to someone about a potential R&D claim, or check out our website for more information.
