Body by Michael Pty Ltd v Industry Innovation and Science Australia

Judges:
J Dunne GM

Court:

MEDIA NEUTRAL CITATION: [2025] ARTA 44

Judgment date: 24 January 2025

General Member J Dunne

Glossary


Abbreviation Reference
1986 EM Explanatory Memorandum to the Income Tax Assessment Amendment (Research and Development) Bill 1986 (Cth)
1996 EM Explanatory Memorandum to the Taxation Laws Amendment Bill (No.3) 1996 (Cth)
2010 EM Explanatory Memorandum to the Tax Laws Amendment (Research and Development) Bill 2010 and the Income Tax Rates Amendment (Research and Development) Bill 2010 (Cth).
ATO Australian Taxation Office.
Application BBM's R&D registration application to IISA dated 11 February 2020.
BBM Body By Michael Pty Ltd, the Applicant.
BBM Articles Submission The submission entitled "Research Articles Professor V" provided to the Tribunal by BBM after the hearing
BBM Closing Submissions BBM Closing Submissions dated 20 November 2024, including an addendum dated 28 November 2024, and a further addendum dated 13 December 2024.
BBM SFIC BBM Statement of Facts, Issues and Contentions[1] Referred to in error on that document as “Statement of Facts, Issues and Contingencies.” dated 21 October 2024
Expert Report The report of Professor Corneel Vandelanotte dated 23 August 2024.
Frascati Manual OECD (2015), Frascati Manual 2015: Guidelines for Collecting and Reporting Data on Research and Experimental Development, The Measurement of Scientific, Technological and Innovation Activities OECD Publishing, Paris.
Income year, 2019 income year, or 2019 year Refers to the year ended 30 June 2019, the income year in dispute.
individual mix argument Refers to the personalisation or individualisation of the six pillars for each participant in BBM's program
IISA Industry Innovation and Science Australia, the Respondent.
IISA Closing Submissions IISA Closing Submissions dated 28 November 2024.
IISA SFIC IISA Statement of Facts, Issues and Contentions dated 20 September 2024.
IR&D Act Industry Research and Development Act 1986 (Cth)
ITAA 1997 Income Tax Assessment Act 1997 (Cth)
R&D Research and development
Six pillars BBM's program involving movement, hydration, mindfulness, nutrition, sleep, breathing.
Social sciences exclusion Paragraph 355-25(2)(d) of the ITAA 1997.

Issues

1. BBM has sought a review in this Tribunal[2] This matter was originally filed in the Administrative Appeals Tribunal and has been transferred to this Tribunal, in accordance with Part 5 of Schedule 16 of the Administrative Review Tribunal (Consequential and Transitional Provisions No.1) Act 2024 (Cth). of the internal review decision issued by IISA dated 26 April 2023.[3] T1. The Application for Review was made pursuant to section 30E of the IR&D Act. The relevant income year at issue before the Tribunal is the 2019 year.

2. IISA's internal review decision was made under section 30D of the IR&D Act and confirmed its earlier finding under section 27J of the IR&D Act. That finding was that BBM's "Activity 1"[4] On occasion in the evidence Activity 1 is referred to as “Activity 1.1.” For the avoidance of doubt, the Tribunal has considered the two references as interchangeable. The two references are due to BBM’s Application referring to “Activity 1” and “Activity 1.1” for the same thing (see T4, 123). was not a core R&D activity as defined in subsection 355-25(1) of the ITAA 1997. As a consequence of this finding, BBM's activities were not entitled to be registered. This in turn meant that the R&D tax incentive was not available to BBM.

3. The issues that the Tribunal is required to consider are:

4. For the detailed reasons outlined below, the answer to each of the questions in paragraphs 3(a) and 3(b) is no. This means the question in paragraph 3(c) is not relevant. The consequence is that IISA's decision that paragraph 355-25(2)(d) of the ITAA 1997 applies is set aside and IISA's decision is otherwise affirmed.

Background

Timeline of events

5. On 11 February 2020 BBM applied to IISA to register its activities in its project entitled "BBM stress release system (new innovated services)."[5] T4. In Mr Abdallah’s evidence before the Tribunal, he referred to advice from a bookkeeper prior to lodging the application, and that BBM’s accountant S Baker & Co lodged the registration application – Transcript 47, [40], [44]. In cross-examination by Ms Smith Mr Abdallah conceded that there had been two prior registration applications by BBM: Transcript 51, [20], [22], also T32, 697. This is of no particular significance to this case.

6. A Notice of Registration was issued by IISA on 11 February 2020.[6] T5.

7. On 16 September 2021 IISA notified BBM that its registration had been selected for examination.[7] T7. Concerns were expressed by IISA in an attached 'Statement of Issues' about the eligibility of BBM's activities for registration for the R&D Tax Incentive. Requests were made for documentation.

8. Between September 2021 and November 2021, BBM provided IISA a presentation[8] T15. a copy of a book entitled 'Project You' written by Mr Abdallah (a director of BBM),[9] T16 and published by Michael Abdallah. and there were discussions and information exchanged between IISA and BBM.[10] T8, T9, T10, T11, T12, T13, T14, T17, T18, T19. This included IISA's R&D Tax Incentive Guide to Interpretation[11] T9 Commonwealth of Australia 2020. and a response to BBM's questions about interpretation of the relevant provisions[12] T13. being provided to BBM, as well as written responses and information provided by BBM to IISA.

9. On 4 November 2021 BBM responded to IISA's Statement of Issues by inserting written replies in red font and embedding that in IISA's original Statement of Issues.[13] T20.

10. Between November 2021 and April 2022 further information was provided by BBM to IISA[14] T25, T26, T30, T31, T32 and T40. and additional questions were asked by IISA.[15] T28, T30, T31 and T34. There were also various emails, meetings and discussions between BBM and IISA.[16] T21 to T40.

11. On 12 April 2022 IISA issued its finding to BBM under section 27J of the IR&D Act. The certificate of finding is dated 7 April 2022.[17] T41, 771. The finding was that BBM's Activity 1 was neither a core R&D activity nor a supporting R&D activity.[18] T41. When considering the core R&D activity definition, IISA's finding concluded that there was no core R&D activity and that Activity 1 as described in the application for registration:

12. BBM applied for an internal review of that finding under section 30C of the IR&D Act on 5 May 2022.[21] T44, T45, T46.

13. Between May and December 2022, BBM and IISA engaged in both correspondence and meetings, and BBM provided more information to IISA.[22] T44 and T58. BBM received and made submissions in response to a draft internal review decision dated 7 December 2022.[23] T58. Note T1, 19 suggests the draft internal review decision was dated 12 December 2022 which seems incorrect. T1, 21 to T1, 58 forms BBM’s response to that draft internal review decision.

14. On 26 April 2023, IISA issued its final internal review decision under section 30D of the IR&D Act. That decision confirmed that Activity 1 was not a core R&D activity.[24] T1. The internal review decision concluded consistently with the original finding that Activity 1:

15. However, the internal review decision differed from the original finding in determining that, based on the evidence, Activity 1 "appears to" fall within paragraph 355-25(2)(d) of the ITAA 1997 the "social sciences exclusion" in any event, and Activity 1 is excluded from being an "eligible core activity" as a consequence.[28] T1, 10. Also IISA SFIC [122]-[128].

16. It is notable that IISA took a different view before the Tribunal from both its finding and its internal review decision on whether BBM's activity was carried out for the purpose of generating "new knowledge."[29] IISA SFIC [108]; IISA Closing Submissions [106], [107]. This is now also challenged by IISA. IISA's submission is, in effect, one of saying there was insufficient evidence for the Tribunal to be satisfied as to this purpose being present, even though IISA had been so satisfied in its internal review decision and finding. IISA's new position may be motivated by conclusions in the Expert Report.[30] Expert Report R2, for example [82] “ I assessed Claimed Activity 1 as completely irrelevant in terms of knowledge generation .” Section 54 of the Administrative Review Tribunal Act 2024 (Cth) provides that when reviewing a reviewable decision, the Tribunal has all the powers and discretions of the original decision-maker.

17. On 22 May 2023, BBM applied for a review of the internal review decision in this Tribunal.[31] T1, 1. BBM's application for review stated that the internal review decision was wrong because: "This decision is completely subjective and in no way objective and clear, especially after the abundance of qualifying information, evidence submitted and proven outcomes business opportunities as a result of the intense work carried out in those years of R&D Activity."

The Evidence Before The Tribunal

The evidence for BBM - the registration application

18. In its Application[32] T4. BBM stated:

The objective of this project is an experiment with a mental health treatment, which will include the creation and development of several equipment prototypes and laboratories, so we can acquire information during our research. Our initial product will be a tool system and an [sic] mobile App (Body by Michael). Our brains and bodies are bombarded by our environment. Gravity, temperature, touch, light, smells and sounds constantly pull on our muscles nervous system and senses. Not to mention the stresses of work, deadlines, relationships and finances. The mental and spiritual benefits of the program can range from a greater sense of peacefulness to profound and life-changing experiences. As lives become busier, more complicated and open to distractions, our program will become increasingly popular as people turn to simple non-invasive ways to relax and keep stress levels down, which will be complemented with exercise and diet, which will provide the correct energies. This project is unique in Australia, therefore there is no information where we can base our conclusion on. We do not know if the project will work or not, however if it does there will be the opportunity to open many markets for our organization [sic], which will convert into more employment. Experimentations have given important data, so our project is covering a significant amount of knowledge gap which did not exist. before. examining the preventative health care benefits of our program therapy found that stress, depression and anxiety were significantly decreased whereas optimism and sleep quality [sic]. There was also a significant correlation between mindfulness in daily life. However, they are not sharing enough information, therefore we must do our own research. [W]ith commitment, our project can open new roads to recovery for conditions including: anxiety, depression, insomnia, addiction etc. As well as pain associated with fibromyalgia, chronic fatigue and emotional injury. While the benefits of our project differ from person to person, most people feel 'good' after getting out. This project has enough potential to change Australia, as attacking our high levels of stress. All contestants will be using the Body by Michael BBM app - as an accountability and educational tool. This contains a wealth of information including exercise programs, recipes, breathing techniques. The contestants will initially sit a mental, physical and emotional type test (what ever [sic] that would be called) where they workout [sic] and highlight what are high, medium and low priority as every individual will have their own skill sets to learn that'll help improve the life and what [sic] relevant to their needs and wants.

19. The Application also stated that new knowledge was intended to be produced and that the outcome of the core activities in the project could not have been known or determined in advance on the basis of current knowledge, information or experience:

In Australia is completely new [sic]. As there is no project like ours efficient and highly automated [sic], has never been attempted in our country. During our tests and experimentations processes, significant amount of data has been obtained so we can analyse it and convert it into new knowledge. Trial and error have been an important practice for our company. There are no manuals or internet resources for a lot of the tests we're doing in our factory and the technology integration we're attempting. Examples of these 'unknowns' are:

  • • Our touchscreen has been custom made and programmed to control the functions of our projects. Again, this is a brand-new system, so testing will be required several experimentations [sic].
  • • Our Systems are custom made and unique to our requirements. Because there is no precedent for the type of project we're making at times we've run into unforeseen problems (despite the amount of research we've put in).
  • • As we are doing several experimentations we are acquiring new data which will cover into more knowledge and better understanding for our project, which also will allow us to add more functions and discover more applications to our project.

The project will have a … control centre and will be programmed to control much of its automated processes. Developing a touchscreen which can be used remotely (e.g., at a reception area) to control the day to day running of the program and functions, such as starting and stopping a session. Radio or cabling connectivity from the touchscreen to control box (whether we use radio or cabling will depend on the premises). This will allow the touchscreen to 'speak' with the control box. The software, programming and user interface of the touchscreen have all been custom made for our company. We have lent [sic] heavily on our expertise for this project and so far, we are very happy with the results. Once we start testing the system, we may discover that certain functions are not working correctly, or the connectivity between the touchscreen and the control box may falter. Luckily, we will have expert assistance and guidance through every step of the process. There are … many variables that can make the project fail, therefore it is impossible to predict the outcome, the only way to know if the project will work or not it is by doing it and wait until there is enough data to base our conclusion on and see if our theories and hypothesis can be confirmed.

20. When setting out the details of its core activities in its Application, BBM said it had spent $134,469 on core activities and described "Core Activity 1" as 'Systematic tests and experimentations' to be carried out between July 2018 and December 2022 and described as:

We are developing a system that allow us to make our systematic experimentations, also as part of our project is the need for much information before we will know if project will work out or not, as we mention before. We are still doing many tests and experimenting in many parts of the project, as well as production tests [sic] runs.

21. In its Application, BBM focused on the Body by Michael app, "tool system", "equipment prototypes" and the touchscreen as a means to collect data.[33] This is further described by BBM in the IISA phone note at T24, 648. The Tribunal notes that BBM explained at the hearing that the touchscreen had been a ‘flop’ and was abandoned – Transcript 34, [34], p38, [1], [11]. The project itself was described as having a health focus - particularly mental health. In saying that, as BBM has accepted, the description of the project and activities in the Application was vague and unclear and perhaps a "bit confused."[34] T1, 27 and T24, 648.

The evidence for BBM - the examination period

22. During the examination period,[35] The examination period is the period up to the finding being issued, and prior to the application for an internal review by BBM. BBM provided IISA with more material and gave further details of its project. In broad terms, the project involved considering BBM's "six pillars," movement, nutrition, breathing, hydration, sleep and mindfulness on an integrated basis. BBM advised that it was developing a holistic approach to enable people to attain health and wellbeing, while also empowering them by giving people knowledge and tools.[36] Adapted from wording in T16, 609, 610. This is further explained below.

23. The additional material provided during the examination period (in summary) was:

The evidence for BBM - the internal review period

24. Following the finding being issued,[79] T41, 771. BBM sought an internal review[80] T44. pursuant to section 30D of the IR&D Act. BBM provided further information to IISA as part of that process. In summary:

25. BBM further explained its position[101] T1, 21 to T1, 57. when responding to the draft internal review decision dated 7 December 2022.[102] T58. That explanation was consistent with BBM's prior submissions to IISA. In summary:

The evidence for BBM - further documentary evidence filed at the Tribunal

27. BBM's evidence was supplemented before the Tribunal by the following documents:

The evidence for BBM - BBM's witness evidence before the Tribunal

28. Mr Abdallah gave evidence before the Tribunal. Mr Abdallah impressed the Tribunal with his commitment to the BBM program, his sincerity and as to the overall benefits of the six pillars.

29. Looking at this case overall, the differences between Mr Abdallah/BBM and IISA in this case are differing technical skillsets causing communication issues. For example, as has been noted above, BBM's submissions to IISA looked at the program as a whole and were focussed on the overall positive outcomes for participants, while IISA was required to consider the activities year by year and was focussed on the detail of what was done and when. IISA recognised this communication issue during the examination period, taking the perspective that BBM was unfamiliar with the eligibility requirements for the R&D tax incentive and officers of IISA made efforts to assist BBM - such efforts are important for a small business like BBM.[131] See for example the phone note at T24. BBM also noted this communication issue late in the process and hired KPMG to assist it to compile its material in a more familiar format for IISA.[132] T1, 33 to T1, 56. This difference in style and approach was also evident in Mr Abdallah's evidence before the Tribunal.

30. Mr Abdallah's witness evidence supplemented the BBM evidence summarised above. A summary of Mr Abdallah's evidence follows:

31. The use of artificial intelligence: Finally, in cross-examination Mr Abdallah conceded that Chat GPT had been used to assist in the preparation of the BBM SFIC. BBM had, prior to the hearing, asked that paragraphs 35-37 of the BBM SFIC be withdrawn and not considered by the Tribunal. This was because those paragraphs contained references to non-existent cases. It appears that this matter had been drawn to BBM's attention by IISA, rather than BBM identifying this problem, but that is unclear. Nevertheless, due to that withdrawal being requested prior to the hearing, I have not considered those paragraphs, these reasons for decision do not take account of those paragraphs and I merely make some general comments below applicable to all parties that appear before the Tribunal.

32. The use of Chat GPT is problematic for the Tribunal. It perhaps goes without saying that it is not acceptable for a party to attempt to mislead the Tribunal by citing case law that is non-existent or citing legal conclusions that do not follow, whether that attempt is deliberate or otherwise. All parties should be aware that the Tribunal checks and considers all cases and conclusions referred to in both parties' submissions in any event. This matter would have inevitably been discovered, and adverse inferences may have been drawn. To ensure no such adverse inferences are drawn, parties are encouraged to use publicly available databases to search for case law and not to seek to rely on artificial intelligence.[169] For example, www.austlii.edu.au.

The evidence for IISA - the Expert Report and evidence from Professor Corneel Vandelanotte before the Tribunal

33. Professor Corneel Vandelanotte was instructed as an expert by IISA. Professor Vandelanotte also appeared as a witness for IISA at the hearing. Professor Vandelanotte is a research professor and leads the Physical Activity Research Group and the 10,000 Steps program at the Central Queensland University. Amongst other matters, he is also a board member of the Appleton Institute for Behavioural Research. He holds a PhD in Physical Education from Ghent University in Belgium.

34. BBM made submissions in relation to Professor Vandelanotte's expertise. For example, in BBM's Closing Submissions there is a reference to BBM engaging earlier with the Tribunal expressing concern that "an exercise physiologist alone would not likely accurately assess the complexities of this research."[170] BBM Closing Submissions 8 and 9. Transcript 96, [15]-[18]. As Professor Vandelanotte is not merely an exercise physiologist, but, in my assessment, a research scientist with credentials in physical education, I have disregarded this submission. Mr Abdallah himself completed, the Tribunal understands, a Bachelor of Health Sciences in Exercise Physiology.[171] Transcript 31, [22]. All other BBM submissions about Professor Vandelanotte's evidence are considered and/or referred to below.

35. Professor Vandelanotte's Expert Report is dated 23 August 2024. In summary, the Expert Report concluded:

36. BBM challenged Professor Vandelanotte's evidence including on grounds of expertise,[176] BBM’s Closing Submissions, 8-9. bias/lack of objectivity,[177] Transcript 83, [30]. BBM’s Closing Submissions, 8 [5], and BBM’s Articles Submission [8]-[9]. and because Professor Vandelanotte expressed "assumptions" and "opinions"[178] For example, BBM’s Closing Submissions, 8, “Key questions raised during cross-examination” and 9. on a number of issues. BBM considered that Professor Vandelanotte had relied only on documents provided by IISA.[179] BBM Closing Submissions, 9, [4]. BBM submitted the Expert Report should not be admissible as a "credible source of evidence."[180] BBM Closing Submissions, 9.

37. I do not accept BBM's submissions. I do not have a concern about Professor Vandelanotte's objectivity nor his expertise. There is nothing in the instructions or the Expert Report that gives me concerns about bias. I reject BBM's submission that bias arises because Professor Vandelanotte did not ask BBM questions or observe its activities.[181] BBM Articles Submission, 8-9. This is a misunderstanding of the role of an expert witness. Professor Vandelanotte reviewed material given to him by IISA which was transparently identified and comprises the BBM material from the T documents and from the Tribunal Book, correspondence between BBM and IISA and the Administrative Appeals Tribunal's "Persons Giving Expert and Opinion Evidence Guideline."[182] The Administrative Review Tribunal’s “ Guideline on persons giving expert and opinion evidence” is to similar effect. That is not IISA material. Professor Vandelanotte then responded to the questions in his instructions which are at the front of the report. The role of an expert witness is to give opinions. In giving those opinions, an expert witness is required to identify the assumptions or qualifications made. It was appropriate for Professor Vandelanotte to give opinions and make and identify assumptions and qualifications.

38. The cross-examination of Professor Vandelanotte and other submissions by BBM about his evidence are considered in the analysis below.

Analysis and Reasons for Decision

39. Below I set out the role of the regulators, the object of the R&D tax incentive (with some observations about the case as presented to the Tribunal), the statutory context and my conclusions.

Whether Activity 1 or any part of BBM's activities met the definition of core R&D activities as defined in subsection 355-25(1) of the ITAA 1997

The statutory and regulatory context - The two regulators

40. The research and development tax incentive program is regulated by two regulators, IISA and the ATO.[183] BBM noted in its application for review (T1) that it also has a case before the Tribunal involving the ATO. There are two main statutes to consider - the IR&D Act and the ITAA 1997.

41. Each of the regulators has a specific role, the two regulators work together, and they have the ability to share information.[184] Section 355-50 of Schedule 1 to the Taxation Administration Act 1953 (Cth) and section 47 of the IR&D Act. This is what happened here. There is nothing whatever inappropriate about that, as both regulators have duties to ensure that the R&D tax incentive program is administered appropriately, and the integrity of the program is maintained. As was noted in the 2010 EM at [5.3], the key role for both regulators is to protect the integrity of the R&D program:

A key function of [IISA] will be to enhance the integrity of the program by managing a process of registration for activities. Registration allows [IISA] to undertake risk assessment and compliance work, complementing integrity measures undertaken by the Commissioner of Taxation (Commissioner). In conducting this risk assessment and compliance work, [IISA] will confirm or reject an R&D entity's self-assessment of certain activities as 'core' or 'supporting' R&D activities as defined under new Division 355 of the ITAA 1997.

42. The main tasks carried out by each regulator are as follows:

43. In this case both IISA and the ATO have engaged with BBM. IISA's examination, finding and internal review decision all resulted from an initial ATO referral to IISA.[188] T8, 140. Again, there is nothing uncommon nor inappropriate about this.

The R&D Tax Incentive program - object

44. The R&D Tax Incentive program has had a number of iterations since the R&D regime was first enacted in 1986. However, the purpose of the program has remained broadly unchanged.

45. Section 355-5 of the ITAA 1997 provides:

46. The program is focussed on encouraging industry to conduct in a scientific way activities for the purpose of generating new knowledge. In a broad sense, it seeks to encourage additional R&D that spills over to benefit the wider economy.[189] Review Panel report Review of the R&D Tax Incentive (4 April 2016) at page 5 and page 7. See also Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25].

47. There is a similar focus on encouraging industry innovation in section 3 of the IR&D Act which sets out the object of the IR&D Act:

The object of this Act is to position Australia as a leading innovation nation by:

  • (a) facilitating the provision of independent strategic advice about investment in industry, innovation, science and research; and
  • (b) supporting and encouraging collaboration in the development and delivery of programs relating to industry, innovation, science and research; and
  • (c) authorising spending on programs relating to industry, innovation, science and research; and
  • (d) promoting the development, and improving the efficiency and international competitiveness, of Australian industry by encouraging R&D activities, innovation and science activities and venture capital activities.

48. The 2010 EM confirms the focus is on industry, including small business. At [1.10] the R&D tax incentive was described as follows:

A carefully designed incentive lowers the cost of doing R&D and helps boost productivity and economic growth. To this end, the new R&D tax incentive focuses assistance on activities that are likely to deliver economy-wide benefits that would not be enjoyed in the absence of public support. It also significantly improves the incentive for smaller firms to undertake R&D.

49. The focus on industry is also reflected in IISA's name, with the word "Industry" being added to its former name in 2021. The Explanatory Memorandum to the Industry Research and Development Amendment (Industry Innovation and Science Australia) Bill 2021 (Cth) confirms this focus:

The amendment to the legislated name of [Innovation and Science Australia] reflects the updated focus of the body on Australian industry and industry's role in innovation and science. The change of name is part of broader policy reform as per the Government's request to the Minister for Industry, Science and Technology to reshape [Innovation and Science Australia] to focus more on Australian industry.[190] Explanatory Memorandum to the Industry Research and Development Amendment (Industry Innovation and Science Australia) Bill 2021 (Cth), 1.

50. Prior cases before the Administrative Appeals Tribunal and the Courts have advised IISA that the focus on industry in the objects noted above[191] See [44] to [49] above. means that IISA should not be setting a standard of scientific research equivalent to (for example) an academic research program with accompanying analytical papers, or a laboratory. Legislative text is to be read with its context and purpose in mind.[192] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 55 [78]; Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25] and section 15AA of the Acts Interpretation Act 1901 (Cth).

51. For example, in
PKWK and Innovation and Science Australia [2021] AATA 706 at [24]:

It is perhaps useful to acknowledge that the language used in drafting this section places some emphasis on the considerations of Australian industry and venture capital activities. The Tribunal considers that the industry and commercial quotient of these objects must be borne in mind when considering the substance of this application. In construing the relevant legislation applicable to this application and applying it to the relevant facts, these industry-based objects direct the decision-maker towards industry and venture capital considerations. These may differ from those that might be applicable to an institutional or academic environment, such as may be the case at the CSIRO or universities. Therefore, the task of construing this legislation must be undertaken with a degree of realism, adopting a beneficial and commercial approach, consistent with the text and objects referred to, for the purpose of encouraging research and development in a commercial setting.

52. In the same case at [243] the Administrative Appeals Tribunal noted:

It should be emphasised that the objects contemplate research being undertaken by private industry not institutions with which we are familiar, such as CSIRO or perhaps the Walter and Eliza Hall Institute. It is, as contended by the Applicant, beneficial legislation which should be construed in a manner consistent with its text and objects.

53. In Royal Wins Pty Ltd and Innovation and Science Australia
[2020] AATA 4320 at [36]:

[I]t could not be expected that industrial research and development would necessarily follow the same path as that undertaken in, for example, a university setting. Industry research and development can take different forms.

54. In
GQHC and Commissioner of Taxation [2024] AATA 409, at [254]-[255] the Administrative Appeals Tribunal noted that the "scientific method" is the important threshold:

253. GQHC submitted that the words of section 355-25 do not require "the design or progression of activities to conform to any academic or industry standard, i.e., the section does not incorporate standards employed by peer reviewed journals or universities that govern the acceptance or credibility of studies. All that is required is a hypothesis, an experiment, observation and evaluation, that lead to logical conclusions." As a result, GQHC stated that there is no requirement for:

  • (a) a plan or documents; or
  • (b) If there is a plan, for it to be free from scientific or academic criticism.

254. GQHC submitted that the objects of the R&D tax incentive "contemplate research being undertaken by private industry not institutions such as universities or other research organisations."

255. This submission is not unreasonable. After all, one of the objects of the IR & D Act is to encourage industry to engage in R&D . Only entities actively engaged in R&D can take advantage of the tax offset regime. Even so, the research activity has to be scientifically conducted. Section 355-25(1)(a) requires as a baseline threshold for quality; that the work must be "based on principles of established science ." The scientific method "establishes a threshold." If there were no minimum threshold standards, what would be excluded from the definition of a core R&D activity? The definition would be meaningless. (Emphasis added)

55. On occasion, the Tribunal's view is that IISA's expert evidence from Professor Vandelanotte set a research standard that an applicant does not need to meet to satisfy the requirements of the R&D incentive program.[193] For example, Expert Report R2, [75] Professor Vandelanotte refers to data storage by universities as a comparative. At [59] Professor Vandelanotte refers to the way experimental research is reported in academic literature and scientific journals as a comparative providing commentary on what science journals do and do not accept (see [35(k)] above for the full quotation). At [54] Professor Vandelanotte refers to the ‘real research world’ which can only be assumed to be academia. At [59] Professor Vandelanotte refers to how things are “normally reported in the literature.” In addition, at times IISA's correspondence reflected a standard that is both not in the statutory provisions and which may not be realistic to an industry-based program. For example, IISA states that to meet the observation and evaluation words in the statutory provision, "analysis of numerical data using established statistical techniques" is required,[194] T13. without specifying what those techniques are or where that requirement comes from or why "observation" and "evaluation" do not have their plain meaning.

56. IISA should ensure that the standard it adopts in considering a case before it in good faith is always realistic, commercial, applicable to industry and consistent with the statutory words.[195] As is required by [2.2(3)] of the Industry Research and Development Decision-making Principles 2022 (Cth) and [2.2(3)] of the earlier iteration (applicable to BBM’s case) - the Industry Research and Development Decision-making Principles 2011 (Cth). For the avoidance of doubt, the Tribunal finds that IISA did comply with the decision-making principles in this matter and makes no negative findings against IISA in this regard. To do otherwise could narrow the scope of the R&D tax incentive to such a degree that it is inaccessible to "smaller firms" (per the 2010 EM) without the deep pockets to hire specialist advisers or to have employees focused solely on R&D, and only accessible to academia and laboratories or (at best) large industry with much deeper pockets.

57. IISA is aware of this issue and acknowledged in IISA Closing Submissions at [34(d)]:

Professor Vandelanotte's evidence … should not be understood as requiring R&D activities under the ITA Act to meet the standards of scientific journals. Rather, his reference to the normal practice for scientific journals illustrates the principle of established science with respect to the presentation of data to emphasise how far the Applicant had departed from those principles due to the absence of any actual data.

58. The Tribunal accepts that was the intention and that BBM's evidence is wanting in some respects. However, using an example, IISA's focus on the number of participants (be it six, seven or eight)[196] See [30(f)] above. and Professor Vandelanotte's comments as a comparative about a study involving 500 people[197] Expert Report (R2), 1361. being a "normal" level require some comment. In my view it is not practicable to set a standard such as that as "normal" for industry R&D especially involving a small business, and nor is it sensible to say that this kind of level is some sort of standard of scientific method (baseline or otherwise) from which BBM has departed. IISA should not be setting research standards at a laboratory or in the academic arena as a baseline. To do this is to seek scientific perfection from industry. IISA needs to approach matters with some realism and interpret the legislative scheme taking into account the purpose of the regime and the fact that the R&D regime is focused on industry, including small business.

59. Following on from the above point, BBM has used scientific words throughout its evidence, submissions and documentation.[198] For example, BBM’s use of “empirical” “iterative” “protocols” “systematic” “experiments” or “experimentation” and even “systematic experimentations” permeates the documentation on the T documents, see T1, 21, T4, T20, T57, T59. The material may have been clearer if BBM had felt it could evidence what it “tested” and why. Obviously, BBM considered this might support its application. For example, BBM uses the word 'laboratory'[199] For instance, see BBM’s application for registration (T4), referred to at [18] above, and BBM’s email dated 14 November 2021 (T25) referred to at [23(h)] above. when describing its premises that from the pictures are nothing like a laboratory. A laboratory is not needed to meet the statutory test in any event as industrial research and development may be carried out from all types of premises, even if those premises are being used for something else (like a production run) at the same time.[200] 2010 EM [2.11]. There were moments of confusion in the use of scientific words - for instance BBM described the hypothesis as not being able to be predetermined in one submission, leading to cross examination by Ms Smith.[201] See [23(m)(iii)] above. BBM’s Closing Submissions also referred to the outcome of the hypothesis as not being known in advance. The statutory test is about whether the outcome of the activities could be known in advance, and it appears that is what BBM meant. BBM also incurred costs in obtaining an adviser to essentially reformat its evidence into a description more familiar to IISA with the 'right' scientific words used.[202] T1, 33 to T1, 56.

60. The Tribunal's substantive concern is a circumstance where scientific words do not correlate easily with a potential industry applicant's intended industrial research (for example, research considering improved production processes). In that event, an R&D registration application may not be made due to concerns about the requirements and cost of seeking technical advice, and genuine industrial research may not be undertaken. This would be contrary to Parliament's intention. This concern particularly relates to "smaller firms" (like BBM in this case) which the 2010 EM stated were to be incentivised to work on R&D and which may not always have the resources to seek expert advice.

61. In addition, if applicants are encouraged by IISA consciously or otherwise to give a 'science vibe' to registration applications and correspondence, submissions may become increasingly unclear and, at worst case, even farcical. A lack of clarity is a problem in this case for example. As was noted in
Rix's Creek Pty Ltd; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645 at [16], no particular label or form of words is necessary when describing what has been done.

62. The question to consider is what has been done and whether that meets the statutory test, no matter what words are used by an applicant. IISA has the task of considering that question. While the statutory words and putting those to an applicant is very important, not seeing those exact words used in an applicant's documentation or submissions does not necessarily mean that the statutory test is not satisfied. A rigid approach by IISA to documentation, the need to see particular words used in the material and an academic-style scientific method is not sensible administration of an industry R&D regime. The Tribunal encourages IISA to take a nuanced perspective to its consideration of applications or it may narrow the potential applicants for the R&D tax incentive in a manner that is unintended.[203] The Tribunal specifically acknowledges that certain IISA staff in this case did try and assist BBM, particularly IISA’s Ms Jensen-Pull’s efforts in the examination process on the issue of the hypothesis – see for example the phone note T24. This is to be encouraged.

The definition of 'core R&D activities'

63. Both the finding under section 27J of the IR&D Act and the internal review decision under section 30D of the IR&D Act were issued on the basis that BBM did not carry on activities that satisfied the definition of core R&D activities in section 355-25 of the ITAA 1997:

Core R&D activities

  • (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).
  • (2) However, none of the following activities are core R&D activities :
    • (a) market research, market testing or market development, or sales promotion (including consumer surveys);
    • (b) prospecting, exploring or drilling for minerals or petroleum for the purposes of one or more of the following:
      • (i) discovering deposits;
      • (ii) determining more precisely the location of deposits;
      • (iii) determining the size or quality of deposits;
    • (c) management studies or efficiency surveys;
    • (d) research in social sciences, arts or humanities;
    • (e) commercial, legal and administrative aspects of patenting, licensing or other activities;
    • (f) activities associated with complying with statutory requirements or standards, including one or more of the following:
      • (i) maintaining national standards;
      • (ii) calibrating secondary standards;
      • (iii) routine testing and analysis of materials, components, products, processes, soils, atmospheres and other things;
    • (g) any activity related to the reproduction of a commercial product or process:
      • (i) by a physical examination of an existing system; or
      • (ii) from plans, blueprints, detailed specifications or publicly available information;
    • (h) developing, modifying or customising computer software for the dominant purpose of use by any of the following entities for their internal administration (including the internal administration of their business functions):
  • (i) the entity (the developer ) for which the software is developed, modified or customised;
    • (iv) an entity connected with the developer;
    • (v) an affiliate of the developer, or an entity of which the developer is an affiliate.

64. Before analysing this definition in the context of BBM's project, it is important to note at the outset that the Tribunal is tasked with considering the income year in question and not the project as a whole, unless activities outside the year in question shed light on the activities in that year.[204] Coal of Queensland v Innovation and Science Australia [2021] FCAFC 54 [131]-]134]; Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 [47]. Section 355-25 focuses on the activities, not the overall project. On occasion the Tribunal's task is made difficult by BBM's evidence which generally had a focus on the overall project, as pinning down exactly what was done in the income year is sometimes difficult.

65. There are a number of aspects to subsection 355-25(1) to consider and each of those are outlined below, alongside my holdings to the extent BBM's case is relevant to those aspects.

Experimental activities

66. This is not a separate test on its own and the words have little work to do. This merely describes the activities that meet the subparagraphs in subsection 355-25(1) (
Moreton Resources Limited v Innovation and Science Australia [2019] FCAFC 120 at [148]).

[W]hose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience

67. R&D by its very nature involves considering an unknown. The 2010 EM explains this requirement:

2.12 To qualify as core R&D activities, experiments will not merely confirm what is already known, or have an outcome that can be known or determined in advance. Rather, they will be activities whose outcome can only be determined by employing a systematic progression of work based on scientific principles and using an approach that proceeds from hypothesis to experiment, observation and evaluation and leads to logical conclusions. This approach is generally known as the scientific method. [Schedule 1, item 1, paragraph 355-25(1)(a)]

2.13 The requirement for the scientific method establishes a threshold for the knowledge gap and the degree of uncertainty that an eligible experiment must seek to address. The threshold will not be met if the knowledge of whether something is scientifically or technologically possible, or how to achieve it in practice, is deducible by a competent professional in the field on the basis of current knowledge, information or experience.

68. The first issue is the portion of the statutory wording "on the basis of current knowledge, information or experience."

69. No existing research papers : BBM's first argument is that there are no research papers or other material describing an integrated approach on all six pillars,[205] For example, see BBM evidence and submissions referred to above [19], [23(d)(iii)], [23(h)], [24(c)(iii)], [24(c)(iv)], [24(g)(ii)], 30(k)], [30(l)], [30(m)]. BBM SFIC [12]. BBM Closing Submissions 2, 4, 5, 6. so that means the outcome cannot be known or determined in advance as there was no "current knowledge, information or experience." For example, in its reply to IISA's draft internal review decision[206] T1, 24. BBM said:

Again, this claim [that the outcome could be determined in advance] can be taken as subjective and biased as there is absolutely no literature or detailed experiments done in the market that encompasses the 6 pillars the way we have brought them together - the research is scarce at best and so the outcome was still quite gray [sic] and unrefined; and our experimental process showcased that the outcomes in research were never the same for any two people. At best they may have been similar, but never the exact same.

70. While the non-existence of papers or research on the specific topic is a relevant fact to consider, of itself that is not an answer to the statutory test. The statutory test is wider than that. The provision refers to "knowledge", "information" and "experience" - all of which are wide in scope in their ordinary meaning.[207] See Macquarie Dictionary (9 th ed, 2024). The question to be assessed is, whether or not there was a study, experiment, literature or paper, could current[208] With “current’ being the 2019 year. experience have determined the outcome? Could current knowledge have determined the outcome? Could current information have determined the outcome?

71. Legislative text is to be read with its context and purpose in mind.[209] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 55 [78]; Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25]. Pursuant to section 15AA of the Acts Interpretation Act 1901 (Cth) an interpretation that best achieves the object of the legislative provision is to be preferred. The above interpretation is supported by the 2010 EM which states (at [2.18]) "the knowledge being sought must go beyond validating a simple progression from what is already known and beyond merely implementing existing knowledge in a different context or location." That comment is revealing. Merely implementing what is already known in a different way is not sufficient to meet the intended application of the statutory words. I reject BBM's assertion that the absence of research papers is, of itself, sufficient to meet this test.

72. Individual mix of the six pillars: As can also be seen from the BBM submission quoted above, BBM's case is also that 'the individualisation' of the six pillars to the particular participant makes the outcome not able to be "known or determined in advance on the basis of current knowledge, information or experience." Those individual outcomes or the individual mix of the six pillars is, in BBM's submission, an unknown outcome that "could not be known or determined in advance on the basis of current knowledge, information or experience."[210] See for example BBM’s evidence noted above at [23(g)], [23(j)], [23(k)], [24(c)(ii)], [24(c)(iii)], [24(c)(v)], [24(c)(vi)], [24(e)], [24(g)(ii)], [24(g)(iv)], [27(b)(iii)], [30(a)], [30(l)] [30(m)]. Also, for example BBM SFIC [12], [14], [16], [34], [41], [44], [48], [49], [58], [167]. BBM’s Closing Submissions 7, [6] amongst an array of other submissions. This also captures BBM's arguments that new machines added to the facility meant that individual outcomes for particular participants could not be determined in advance,[211] See [30(l)] above as an example. and suggestions in evidence about genetic and metabolic dispositions of participants being different and this meaning there were unknown outcomes.[212] Transcript 40, [10]-[15]. In my analysis below I refer to this group of arguments by BBM as the 'individual mix' argument -that is, the individual mix of the six pillars could not be known or determined in advance because of differences between individual participants.

73. In
Active Sports Management Pty Ltd v Industry Innovation and Science Australia [2024] FCA 1346, at [36] the Federal Court cited (with approval) the observations of the Administrative Appeals Tribunal in the context of the development of an athletic shoe for an individual that was a well-known basketball player:[213] The Tribunal’s observations were upheld on appeal.

The senior member's analysis started with consideration of whether the outcome of the Claimed Activities could not have been known or determined in advance on the basis of current knowledge, information or experience (i.e., the first limb of s 355-25(1)(a) being the first characteristic described at [6] above). The senior member expressed the following views at [32] to [37]:


32. The 'outcome' for the purposes of the statutory test is the outcome of the experimental activities in question. While the precise data produced by the work undertaken could not have been known in advance, it does not necessarily follow that the work constituted an activity whose outcome could not have been known or determined in advance on the basis of current knowledge, information, and experience; Coal of Queensland v Innovation and Science Australia (2021) 285 FCR 286 at [101].

33. In respect to the whole project, it is unclear precisely what unknown outcome the applicant was seeking to determine, other than to create a basketball shoe which satisfied Mr Dellavedova's specific requirements. It is accepted that the requirements of Mr Dellavedova could not have been determined in advance. However, I am not convinced that this is an outcome directed to a technical or scientific uncertainty. It is a subjective outcome and one outside of the control of the applicant.

74. In
Coal of Queensland Pty Ltd v Innovation and Science Australia [2021] FCAFC 54, the Full Federal Court dealt with a similar submission to BBM's individual mix argument, holding at [101]:

A theme running through the applicant's submissions is that the precise data produced by the tests conducted by A&B Mylec could not have been known in advance. The difficulty with this line of argument is that it fails to read s 355-25(1) in its entirety. The section refers to experimental activities "whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience." During the hearing of the appeal, senior counsel for [IISA] provided an analogy of a person having a routine blood test for their cholesterol level. In that analogy, merely because the precise data or results cannot be known in advance does not mean that the test constitutes an experimental activity whose outcome cannot be known determined in advance as referred to in the section. That analogy is useful in exposing difficulty with the applicant's approach. In the present case, while the precise data produced by the work undertaken by A&B Mylec could not have been known in advance, it does not necessarily follow that the work constituted an activity whose outcome could not have been known or determined in advance on the basis of current knowledge, information and experience.

75. In
GQHC and Commissioner of Taxation [2024] AATA 409, at [368] the Administrative Appeals Tribunal held:

Precise data/results not known specifically by the Group does not mean the activity was an "experimental activity" whose outcome could not be known or determined in advance.

76. The blood test analogy and the individualisation of the athletic shoe are each apt analogies for BBM. The individual mix argument from BBM is exactly what the Full Federal Court warned about in
Coal of Queensland Pty Ltd v Innovation and Science Australia [2021] FCAFC 54. Merely because that individual mix of the six pillars is not known (or the results of the blood test in the analogy considered in the Coal of Queensland Pty Ltd case are not known), that does not mean that the activities or process to get to the individual mix involved an activity "whose outcome could not have been known or determined in advance on the basis of current knowledge, information and experience." The individual mix argument does not properly take all of the statutory words into consideration. It also suffers from the problem noted in
Active Sports Management Pty Ltd v Industry Innovation and Science Australia [2024] FCA 1346, that is, whether it is a scientific uncertainty to simply be adapting something for one individual.

77. In my view, it is nonsense to say that individualisation of itself means an activity meets this aspect of the definition of core R&D activities. The individual mix argument cannot logically meet the statutory words. For example, in nutrition or the nutrition pillar it would be unknown what the best nutrition plan was for Person A until an array of other tests had been undertaken (such as tests for cholesterol, glucose levels etc). But that does not meet this part of the statutory test for R&D purposes. The processes and tests for Person A to obtain those details are known. In addition, the nutrition plan itself could also be determined in advance depending upon potential outcomes of those tests (e.g., a particular dietary plan can be predicated at the outset should the processes/tests indicate that Person A is diabetic or pre-diabetic). Similarly, in the movement pillar, once known processes are undertaken (e.g., testing flexibility, injury or strength) a program can be devised, and the kind of program that is best for individuals with particular areas of weakness can be determined in advance in any event. Similar comments can be made for each of the pillars. Even considering pillars together there is no difference. For example, sleep, hydration and movement - it is existing information that more sleep is better, optimal hydration is better and an exercise program can be customised, so doing that customisation does not transform that known information into an uncertainty.

78. Further, were the individual mix argument to be correct, the array of matters that could possibly comprise core R&D activities would be very wide indeed - for instance, tailoring clothing or personal training might meet the definition.

79. I find that the 'individualisation' of a program comprising the six pillars does not meet the statutory requirement that the "outcome cannot be known or determined in advance on the basis of current knowledge, information or experience."

80. Identifying the "gap" between isolated and integrated approaches to the six pillars : There is a larger question to consider. This question is whether activities comparing an integrated approach vs an isolated/linear[214] I note that BBM uses “isolated”, “linear” as well as “static” and “fragmented” (see BBM SFIC [157]) to describe a non-integrated process. There seems no intended difference between these words although the latter words appear to be used in critique of existing knowledge and information. approach to the six pillars gives rise to outcomes that "could not be known in advance based on current knowledge, information or experience." In this way, and consistent with the case law cited above when considering the individual mix argument, I am testing whether the process/activity that results in the individual mix "could not be known in advance based on current knowledge, information or experience."

81. A broadly comparable case on the facts is
GQHC and Commissioner of Taxation [2024] AATA 409. Among other matters, in that case the Administrative Appeals Tribunal considered a "multi-stage" vs "single stage" incubation trial in relation to poultry farming. This involved trialling a Chickmaster machine (for multi-stage) and then a Jamesway single-stage machine (for single stage incubation) and comparing the results. The Tribunal concluded (at [363] and [376]) that existing evidence demonstrated that it was already known that "single stage" incubation was beneficial and already known that "multi-stage" incubation was not as beneficial in terms of incubation results. The question was what the existing knowledge, information and experience was at the time. There was inconsistent evidence from the applicant in GQHC about that existing knowledge and the Tribunal accepted the Commissioner's expert evidence of that existing material. This case is to the effect that the weight of the overall evidence needs to be considered when determining this question.

82. On this point, as would be expected, IISA and BBM have differing positions:

83. I have considered the evidence before me and the submissions by the parties carefully. It is very hard to see a substantive difference between integrated and isolated/linear approaches. I find that the integrated and isolated distinction is a very fine line indeed. BBM appropriately acknowledged that the difference is not huge.[233] Transcript 57, [20], [22].

84. I accept the comments in the Expert Report at [15]-[16] and [37] that existing knowledge, information and experience in the income year demonstrated that positive effects arise from each of the six pillars, sometimes more than one at once.[234] I note that BBM also seems to have accepted some of the outcomes could be known in advance – for instance see [23(j)] above which refers to a BBM submission about shallow breathing causing participants to crave stimulants, and BBM noted it being backed by medical research. I also accept the comments in the Expert Report that adopting a group of health behaviours together is beneficial in terms of reinforcement and that this too was a known outcome. That latter point is commonsense in my view. Nevertheless, I have persisted to consider the evidence as a whole to consider whether the claimed "gap" could reveal itself in BBM's activities in the 2019 year.

85. The statutory words in subsection 355-25(1) of the ITAA require me to consider whether the outcome of the activities cannot be known or determined in advance on the basis of current knowledge, information or experience.[235] Moreton Resources Ltd v Innovation and Science Australia [2019] FCAFC 120 , [143(e)] confirms that the activities are the “hinge” of subsection 355-25(1) of the ITAA 1997. The activities undertaken by BBM in the 2019 year to reveal the "gap" between isolated and integrated methods need to be considered. The activities in evidence are gathering information from participants, coaching notes and submissions by BBM as to what was done.

86. I am not persuaded this "gap" reveals itself from BBM's activities in the 2019 year and I am satisfied that the outcome of BBM's activities in 2019 reveal answers within the knowledge, information and experience at the time. This is for the following reasons:

87. In short, while there is a lot of BBM material before the Tribunal, on the issue of whether the "gap" "could not be known in advance based on current knowledge, information or experience", none of BBM's material goes much beyond BBM's main arguments on this point; that is, there was no prior study on the six pillars on an integrated basis or that the individual mix is an unknown outcome. Both of those submissions are, as I have said above, not sufficient to meet the statutory test.

88. I am not persuaded that the cross-examination concession by Professor Vandelanotte noted above[242] See [82(g)] above. means this test is satisfied. The context of that concession is important. In Professor Vandelanotte's evidence before the Tribunal, he was saying that technically there is an experiment, but then went on to say in both his evidence before the Tribunal and the Expert Report that the "gap" was so nuanced to be not meaningful due in part to existing knowledge and information. On re-examination Professor Vandelanotte stood by his Expert Report on this point.[243] Transcript 85, [21]-[25], [29]-[47], 86, [4]-[16], [22]-[43].

89. I have concluded that if the "gap" is an unknown, the activities from BBM in the 2019 year would not reveal it. As noted above, the outcome of BBM's activities is in my view able to be known or determined in advance. I am also cognisant of other material before the Tribunal. For example, there is a BBM document claiming a "Systematic experiment examining the effects of food consumption on weight gain".[244] T1,36. It cannot be seriously maintained that there is no existing knowledge, information and experience of that matter. Further, the example outcomes from BBM's activities in the 2019 year that were put to BBM by IISA during the examination period are summarised above at paragraphs 23(f) and 23(g). I find that those conclusions (such as that bad sleep causes people to make bad food choices or that breath control assists anxiety) are conclusions that could be determined from existing knowledge, information and experience in the 2019 year. Some of those conclusions are well-known.

90. As that is "basically the sum of it",[245] See [23(g)] above. and given the remainder of the material before me, including the existing knowledge cited in the Expert Report, I am not persuaded on the evidence before me that the outcome of the activities undertaken by BBM on the "gap" "could not be determined in advance on the basis of existing knowledge, information or experience."

91. Algorithm/app : The final question relates to the algorithm or the app. Could the outcome of activities related to the algorithm or app in the 2019 year be determined in advance on the basis of existing knowledge, information or experience?

92. BBM's submissions and material are confusing as to what the activities on the app and algorithm actually were in 2019. This is unhelpful. At some points BBM says the app and/or algorithm was part of the activities in the 2019 year,[246] See for example [27(b)(iii)], [30(k)],[30(m)]. then merely part of the "tools" used to collect information.[247] See 18]-[21] and [23(e)] above. Then BBM says that the app should be the focus and is the centrepiece of the R&D.[248] See [24(e)] and [24(g)(iii)] above. It is the "primary focus"[249] BBM SFIC [87]. and the "core objective [is] developing and refining a real-time adaptive algorithm."[250] BBM SFIC, [60]. The "new knowledge" is the algorithm.[251] BBM SFIC [3]. At other times, neither the app nor the algorithm is the focus.[252] See [24(g)(v)] above and T1, 29. Then the algorithm is a potentially future project, so not relevant to the 2019 year.[253] See [27(b)(iii)] and [27(c)] above. Also, A3, 277 and A3, 325. There are also substantial claims made about the algorithm and the app. For example, the algorithm is "a real time adaptive algorithm capturing international interest",[254] BBM Closing Submissions 11. See also BBM SFIC [3], [5] which are to similar effect. the algorithm is a "personalised health algorithm… unique to the person's circumstances",[255] See [23(p)] and [30(m)] above new product in the form of an “adaptive algorithm.” T1, 25. the app "sets us apart from the rest of the world",[256] See 24(g)(i)] above. in terms of the app, BBM is the "first in the world to pioneer such a detailed and intuitively personalised program",[257] See [24(g)(ii)] above. "we are also the first to pioneer a continuous data collecting process in the App that will effectively continue to teach us more and more about each personas allowing us to continue to evolve and set brand new standards, knowledge, and breakthroughs",[258] T52, 913. the app is "the most unique UI/UX experience"[259] See [23(d)(v)] above. and "[t]he algorithm's design is embedded in the foundational data we collected, allowing us to tailor health and well-being programs with unprecedented precision."[260] A2, 10.

93. The other material available to the Tribunal, such as a partly hand-drawn hexagonal diagram in a circle to demonstrate the algorithm visually and mostly blank spreadsheets depicting the algorithm questions for each of the six pillars, are not particularly compelling as evidence.[261] See [27(c)] above and T59. There is no new source code referred to, no mathematical formula comprising the algorithm, no actual algorithm and there is nothing in evidence about the algorithm or app that suggest they are entirely different to other algorithms or apps that could provide personalised results at the time, nor to demonstrate that they are not merely the use and progression of that existing knowledge.[262] Such as fit bits available in 2018. It was appropriately acknowledged by BBM in cross-examination that the Tribunal does not have a lot of evidence on the app or algorithm before it.[263] Transcript 58, [26], [47]. BBM also acknowledged that the app used and adapted existing software.[264] Transcript 34, [34], [45], 35 [1], [7]. See [23(e)] and [30(e)] above.

94. The Expert Report's conclusions in relation to the algorithm and app[265] Expert Report R2, [4]-[6], and [20]-[21]. were (in summary):

95. The BBM SFIC[266] BBM SFIC [151]-[156]. seeks to draw a distinction between its app or algorithm and existing devices and apps that were in existence in the 2019 year. I do not accept BBM's assertion[267] BBM SFIC [78]. that there was no app or algorithm that enabled individualisation in 2019. The substantive basis for BBM's challenge is that each existing device, app or algorithm does not deal with all six pillars.[268] BBM SFIC [78], [83] for example. This does not answer the statutory question. The 2010 EM confirmed (at [2.18]) "the knowledge being sought must go beyond validating a simple progression from what is already known and beyond merely implementing existing knowledge in a different context or location."[269] I note that the comments of the Full Federal Court in Moreton Resources Limited v Innovation and Science Australia [2019] FCAFC 120 , [151] are to the effect that the test in paragraph 355-25(1)(b) of the ITAA 1997 (that is, considering whether the activities are conducted for the purpose of generating new knowledge ) can be satisfied to activities that apply existing technology to a new site; not this aspect of the definition of core R&D activities in subsection 355-25(1) of the ITAA 1997. This is considered further below. BBM submits in the BBM SFIC that it is for IISA to provide "evidence to substantiate [its] claim that the algorithm was pre-existing."[270] BBM SFIC [80]. This is not correct. It is for BBM to demonstrate to the Tribunal that the algorithm/app are not a progression of existing knowledge. The Tribunal has no evidence as to how BBM's app is a new process, nor any information about the algorithm, its mathematical formula and why it is not an adaptation of an existing tool and a progression of existing knowledge.

96. BBM's Closing Submissions at [6] confirm that its position is that the algorithm is complex, and the ability to develop an individualised program is novel. Those assertions are not evidence. While there are detailed steps that BBM says it undertook in relation to the algorithm and app, they appear to be future focused,[271] See [27(b)(iii)] and [27(c)] above. Also, A3, 277, A3, 325 and A3, 341. and I have very little evidence to work with for the 2019 year.

97. I turn to considering the case law. In
Camalic Pty Ltd v Innovation and Science Australia [2020] AATA 1590, the Administrative Appeals Tribunal was considering a project which was said to be developing a software predictive tool utilising a significant number of variables to assist company boards to predict increases in shareholder value. Camalic Pty Ltd sought to say that changes in the variables in an algorithm impacted the outcome, making the outcome unable to be determined in advance based on current knowledge, information and experience. This has an analogy to BBM's submissions.[272] See BBM evidence and submissions referred to above focusing on the personalisation/individualisation of the six pillars process, and the different variables that were required as a result in the app and its algorithm: for example see above [23(g)], [24(c)(ii)], [24(c)(iii)], [24(c)(v)], [24(e)], [24(g)(ii)], [30(a)], [30(k)]. The Administrative Appeals Tribunal held at [88] that it was not satisfied that the outcome could not be determined in advance based on current knowledge. At [86] the Administrative Appeals Tribunal stated:

The Applicant has put forward material that indicates no more than that machine learning algorithms will be tasked to do what they are designed to do, yet it claims novelty in this without explaining how the resulting algorithm would constitute new knowledge or a new process.

98. Similar holdings were made in
H2O Exchange Pty Ltd v Innovation and Science Australia [2021] FCA 11, where at [17] the Administrative Appeals Tribunal held that a web-based water trading platform, membership database and client relationship management and payment framework involved "choosing between a suite of known software tools and incorporating them" and "[while] building the online trading platform could involve complicated work, this did not mean there was an uncertainty of outcome." The Federal Court upheld that holding at [29], which was challenged on appeal based on its reliance on expert evidence. This approach is also supported by
Absolute Vision Technologies Pty Ltd and Innovation and Science Australia [2022] AATA 2319, where the Administrative Appeals Tribunal held at [95]-[96] that the statutory words were not met by steps taken "to incrementally add functionality to an existing system based on already known methodologies, techniques and technologies to satisfy the customer or market needs." Similarly, in
Active Sports Management Pty Ltd v Industry Innovation and Science Australia [2024] FCA 1346 at [54], the Federal Court held that the claimed activities merely implemented existing knowledge in a different context.

99. I have concluded that the algorithm and the app in this case are to the same effect as in
Camalic Pty Ltd v Innovation and Science Australia [2020] AATA 1590,
Absolute Vision Technologies Pty Ltd and Innovation and Science Australia [2022] AATA 2319 and
H2O Exchange Pty Ltd v Innovation and Science Australia [2021] FCA 11 - that is, they are the use and adaptation of existing technology, and, while what was done may involve complicated work, this is not sufficient to meet the statutory test. I have little to no evidence as to the new knowledge claimed for the algorithm or the app. I cannot see how they are new. I do not even have the algorithm. I also cannot see how either are a "world first" in the 2019 year given the existing devices available at that time as referred to by Professor Vandelanotte.

100. In short, I am not persuaded that the app or algorithm comprised activities in the 2019 year that could not be known in advance based on current knowledge, information or experience.

101. Conclusions : For the above reasons, I am not satisfied that the evidence before the Tribunal demonstrates that the outcomes of BBM's activities in the 2019 year "could not be known in advance based on current knowledge, information or experience". In particular I find:

102. On this ground alone I would affirm IISA's internal review decision and finding as the core R&D activities definition in subsection 355-25(1) of the ITAA 1997 cannot be satisfied by BBM's activities in the 2019 year as a consequence. I go on to consider the other aspects of the core R&D activities definition.

"(a)….but can only be determined by applying a systematic progression of work that is based on principles of established science and proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions;"

103. The scientific method : The statutory words above echo subsection 355-5(2) of the ITAA 1997 which provides that the object of the R&D program is "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 a general or applied form (including new knowledge in the form of new or improved materials, products, devices, processes or services." (Emphasis added.)

104. The 2010 EM describes "the scientific way" and the words in subsection 355-25(1) as the application of the scientific method. The 2010 EM states:

2.18 The need to employ the scientific method also reflects the degree of novelty in the ideas being tested. That is, the knowledge being sought must go beyond validating a simple progression from what is already known and beyond merely implementing existing knowledge in a different context or location. Rather, the gap between existing knowledge and the hypothesis being investigated will be significant enough to require application of the scientific method.

2.19 Core R&D activities are part of the eligible experiment, rather than being merely related to it. These are the activities whose outcome is being determined in the context of applying the scientific method. However, not all of the steps in the scientific method will constitute experimental activities. Nor will an activity fall within the scope of the experiment merely because the experiment cannot take place without it.

2.20 The scope of eligible core R&D activities might be narrower than what the firm views as its R&D 'project'.

105. As is noted above at paragraph 67, in the context of considering whether the outcome of the activities could be determined in advance, the 2010 EM also states at [2.13] that the "scientific method" "establishes a threshold for the knowledge gap and the degree of uncertainty that an eligible experiment must seek to address."

106. The words "systematic progression of work that is based on principles of established science and proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions" were added to the forerunner of section 355-25 by a legislative change in 1996. The 1996 EM stated that "the definition of 'research and development activities' will be made more explicit by importing concepts from the Explanatory Memorandum to the Income Tax Assessment Amendment (Research and Development) Act 1986."[273] 1996 EM, [9.52]. The 1986 legislation enacted the first version of the R&D regime.

107. The 1986 EM stated at 14:

the uncertainty of obtaining the outcome can be removed only through a program of systematic, investigative and experimental activities in which scientific method has been applied, in a systematic progression of work (based on principles of physical, biological, chemical, medical, engineering or computer sciences) from hypothesis to experiment, observation and evaluation, followed by logical conclusions.

108. This history informs us that from the inception of the R&D regime, the words were relevant to determining whether the definition of core R&D activities was satisfied.

109. Whether there is a requirement for documentation and contemporaneous documentation : Before considering the statutory words themselves, what they mean and applicable case law, there is a critical issue to tackle first - that is whether documentation is required to meet this aspect of the statutory test or the definition of core R&D activities as a whole. BBM submitted this was not required.[274] Transcript 49, [10]-[20]. IISA had a different view.

110. In the IISA Closing Submissions before the Tribunal, Ms Smith said:[275] Transcript 125, [1]-[16].

At paragraph 72, we refer to the decision of Havilah… Resources, which is a 2020 decision of the AAT. And this says that the words, in a scientific way, suggest that the systematic progression of work should be recorded, so as to achieve that standard. And also, the decision of Royal Wins, where the AAT accepted that it's an essential aspect of the systematic progression of research and development applications that there be adequate documentary evidence. So the applicant said today in closing submissions that there's nowhere in the statute to be found a requirement to document the research or the experiments that they were conducting for their own business purposes, to develop a product. We say that the case law does say that when there's a reference to scientific principles and a systematic progression, that an aspect of that is that experiments be documented, and that records be kept. So although the statute itself doesn't use the words of keeping records or keeping documents, that when meaning is given to the phrases that are used in the statute, it does require that an entity claiming this R&D concession does keep records that enable it to be established what the experiments they were doing were.

111. I do not accept that submission to the extent it is stating the documentation is a requirement. If there was such a requirement it would be in the ITAA 1997. The ITAA 1997 provides for substantiation requirements in other contexts; if a particular kind of substantiation was required in the R&D regime, it would be legislated.[276] For example, Division 900 of the ITAA 1997. I also note that IISA's submission is contrary to IISA's public guidance[277] T9, 179-180. which provides that the types of evidence IISA considers include oral evidence, expert evidence, contemporaneous and non-contemporaneous records and that evidence is "expected to be maintained" without specification of the nature of that evidence. It is true that documentation is desirable for an applicant to meet its evidential burden, the case law states it "might be expected" to be present, and it is true that the absence of such material makes an applicant's evidential burden potentially harder, but none of that goes as far as it being a requirement to have documentation.

112. The cases on this aspect need to be considered:

113. I have concluded that the case law does not support IISA's submission and rather supports the conclusion that all evidence, be it documentary or otherwise, needs to be considered by the Tribunal to determine if the statutory test is satisfied. Depending upon the circumstances, the absence of documentary evidence may create evidentiary difficulty for an applicant, but any such absence is not of itself determinative of a case on the R&D provisions. Were that the position, it would be legislated.

114. This does not end the diversion on the issue of documentation because IISA's submissions repeatedly focus not just on the need for documents, but on the need for "contemporaneous" documents.[278] T8, T34, 712 and T36, 716, T28, 676, T29, 670, T30, 685. Also, T9, 154, T9, 156, T9, 158 are examples in the R&D Tax Incentive Guide to Interpretation where IISA’s expectations are set out, including that there is documentation, numerical data and an array of other matters. T9, 179 states that ‘ Evidence can include written records, oral statements and expert opinions . IISA Closing Submissions continued this focus, for instance [43], [66], [67], [68], [71], [83], [106]. Also, Transcript 53, [19], [34]. This too is not a statutory requirement. BBM challenges this point.[279] T31, 694, Transcript 39, [14], [23], Transcript 49, [14], [15] [19]. This approach by IISA was demonstrated in a gotcha moment where IISA looked at metadata behind BBM's pictures of its 'laboratory' and declared those photos were not contemporaneous with the 2019 income year.[280] T30 and T61. In fairness to IISA, T30 was following up contemporaneous records BBM said it had. However, the photos themselves were provided with T25, and nowhere in that document does BBM assert when it constructed its “laboratory”, so IISA read that in. BBM submitted it was showing IISA the photographs to show what had been achieved in its overall project.[281] Tribunal Book R1, 1098 and the same document at T32, 697. It seems that at almost every turn BBM was taking an overall focus on its six pillars program when responding to IISA.

115. In
Active Sports Management Pty Ltd v Industry Innovation and Science Australia [2024] FCA 1346 at [17], the Federal Court commented:

An absence of documentation evidencing the systematic progression of work undertaken in relation to claimed activities, where more extensive documentation is ordinarily an expected feature of that process, may suggest that the requirements of section 355-25 have not been satisfied;
Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 at [219]. Contemporaneous written evidence detailing the process of each activity will be highly persuasive because the recording of such information is an indication that the activity was carried out in a manner consistent with a systematic progression of work. (Emphasis added.)

116. The Federal Court went on to refer to cases where on the overall circumstances a lack of contemporaneous documentation had been fatal to an applicant's claim. Finding that documents are not contemporaneous with the activity does not determine the statutory test and the Federal Court's judgment does not support that proposition. It is of course commonsense that material prepared at or around the time of the experiment is persuasive evidence for an applicant. Its absence may be problematic for an applicant seeking to meet its evidential burden. However, contemporaneous documentation is one form of evidence in a matter involving the R&D tax incentive, and, as the Administrative Appeals Tribunal and the Courts have noted, other evidence[282] Coal of Queensland v Innovation and Science Australia [2021] FCAFC 54 [113]; Commissioner of Taxation v Bogiatto [2020] FCA 1139 [100] – [102]; Rix’s Creek Pty Ltd ; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645 [21] and [142]; PKWK v Innovation and Science Australia [2021] AATA 276 [268], [270]. can meet the statutory test. There is nothing in the ITAA 1997 requiring contemporaneous documentation before activities will be considered core R&D activities. This is not to say that it would not be sensible for any R&D applicant to maintain documentation and particularly contemporaneous documentation to demonstrate its activities - it certainly would be. But the case law confirms that IISA's submission as to the requirement for documentation is an overreach.

117. "[B] ut can only be determined by applying a systematic progression of work" : Turning to the statutory words, the first requirement is that BBM applied a "systematic" progression of work. In
Re RACV Sales & Marketing Pty Ltd and Innovation Australia [2012] AATA 386 at [24(3)], the word "systematic" was considered, and its ordinary meaning was adopted - "making use of or carried out according to a clearly worked out plan or method, or methodical." In
PKWK v Innovation and Science Australia [2021] AATA 276, at [119]-[120], [335], the existence of spreadsheets showing results were accepted as contemporaneous evidence demonstrating a systematic progression of work. Further, at [242] in PKWK it was held that if an experiment was done badly or with errors, that does not necessarily mean that the work was not carried out in a systematic manner based on principles of established science.

118. There is a lot of written material and a lot of submissions in this case. The available material is not ideal because unfortunately it is at times unclear. It does, however, to some degree demonstrate a "worked out plan." That broad plan was to consider the benefits of the six pillars.[283] That is not the “hypothesis”, which is an issue considered below. I also accept that the information gathered by BBM from participants[284] See the material provided to the Tribunal and referred to above at [27(b)(iv)] [27(b)(v)], [27(b)(vi)], [27(b)(vii)], and [27(b)(ix)]. Also see T32, 699-707. was gathered according to that broad plan, similar to the spreadsheets in
PKWK v Innovation and Science Australia [2021] AATA 276. I cannot discern when that material was gathered but I have assumed (to the benefit of BBM) that it is the 2019 year. It is troubling that BBM referred to other evidence, handwritten evidence[285] The suggestion is that there was contemporaneous evidence that might be in storage, or evidence that is no longer available (such as app data): T32, 697-698. IISA’s concern about this is set out in IISA Closing Submissions at [74]. and other material that may not be before the Tribunal nor IISA.[286] Transcript 106, [5]-[10], see also [23(m)(iv)] above which cites submissions from BBM related to app data amongst other matters. BBM's rationale for a lack of contemporaneous evidence before the Tribunal is not particularly convincing, given it seems to be suggesting it exists.[287] The suggestion is contemporaneous evidence is in storage (T32, 697-698) and there was a suggestion that privacy concerns may prevent that material being provided (Transcript 36, [10]). This latter point seems particularly unconvincing given the material that BBM did produce of tests undertaken by participants with personal details redacted. It would have been more useful for BBM to present all available material. The Tribunal can only operate on the basis of the evidence before it, not material asserted to exist.

119. Even if there is a broad plan that is "systematic", there needs to be a progression of work. For there to be a progression of work there needs to be evidence of separate steps having been undertaken. The evidence before the Tribunal in this respect is mainly in the nature of submissions from BBM. While there is evidence of some tests,[288] See the material provided to the Tribunal and referred to above at [27(b)(iv)], [27(b)(v)], [27(b)(vi)], [27(b)(vii)], and [27(b)(ix)]. the remainder of BBM's evidence is oral evidence[289] Transcript 32, [20]-[46] to 44, [10]. or in the form of submissions to IISA or the Tribunal.[290] See, for example, the material referred to above at [23(i)], [23(m)(i)], [23(m)(ii)], [23(m)(iii)], [23(m)(iv)]. It is stated that hundreds of tests were undertaken but there is evidence of very few.[291] For example, T30, 684. The oral evidence before the Tribunal was that there was research undertaken by BBM, and experts were consulted.[292] Transcript 33, [42], [46]. Also, T32, 697. There is no evidence produced of the outcomes of that activity, no phone notes, no other material - it is asserted as having occurred, which is not of high probative value when trying to determine if the scientific method has been satisfied. Some of BBM's submissions set out a series of steps that BBM states were undertaken as a progression of work. Those steps are said to be comprised of seven steps on one occasion[293] T25, 653 and T30, 687-688. and five steps on another.[294] A3, 288. BBM also submitted that it had completed 13 matters in the 2019 year.[295] A2, 3-11. There is little evidence other than those submissions as to what was done in the 2019 year, and not much on either the seven steps or the five steps.

120. The evidence shows tests undertaken but no obvious progression from them. In particular, there are asserted "information conclusions"[296] For example, T25, 655, 659, 661-662. but nothing substantive demonstrating the analysis and how conclusions were reached based on the tests undertaken. Progressive steps are submitted as having occurred, but I am not convinced there is evidence before me that can satisfy that requirement. My conclusion is that while it is clear that activity did occur in the 2019 year, and while it seems there was a plan that could be said to be systematic, I am not satisfied on the evidence before me that there was a systematic progression of work.

121. "[B] ut can only be determined by applying a systematic progression of work that (i) is based on principles of established science" : The next issue is the meaning of based on "principles of established science" in subparagraph 355-25(1)(a)(i) of the ITAA 1997. Those words are not defined. Legislative text is to be read with its context and purpose in mind.[297] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 55 , [78]; Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25]. Pursuant to section 15AA of the Acts Interpretation Act 1901 (Cth) an interpretation that best achieves the object of the legislative provision is to be preferred. As is explained above at paragraph 107, the 1986 EM is relevant. The 1986 EM at 14 provides some guidance to the intended meaning of "principles of established science", referring to "principles of physical, biological, chemical, medical, engineering or computer sciences." The 2010 EM sets out a number of examples that assist when considering the meaning of "principles of established science." For example, at [2.40] it refers to the hypothesis needing to have a scientific basis.

122. Some of the case law[298] Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 , [74]; GQHC and Commissioner of Taxation [2024] AATA 409 , [247]. supports the view that the words in subparagraph 355-25(1)(a)(ii) of the ITAA 1997 should be interpreted together with the "principles of established science" wording (as might be suggested by the example at [2.40] of the 2010 EM). That is, applying the noscitur a sociis principle of legislative interpretation, the words which follow colour the meaning of the initial words. That would be to interpret the principles of established science as involving proceeding "from hypothesis to experiment, observation and evaluation, and leads to logical conclusion." That approach is supported by material[299] Such as the Frascati Manual, cited in GQHC and Commissioner of Taxation [2024] AATA 409 , [237]. Rix’s Creek Pty Ltd ; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645 , [20] all supports this approach. which suggests that the principles of established science are comprised of those steps. The IISA Closing Submissions also follow that approach.[300] IISA Closing Submissions [69]-[84].

123. In my view the phrase "principles of established science" has a separate meaning from the words in subparagraph 355-25(1)(a)(ii). Subparagraph 355-25(1)(a)(ii) would be otiose if those words were covered by the "principles of established science." As was noted in
GQHC and Commissioner of Taxation [2024] AATA 409 at [255] and the 1996 EM, the principles of established science establish a threshold. In my view, the principles of established science are as cited by the 1986 EM, that is, "principles of physical, biological, chemical, medical, engineering or computer sciences." The 2010 EM confirms this at [2.12], referring to the work needing to be based on "scientific principles."

124. When determining what the "principles of established science" are, the case law establishes that experts are best placed to comment.[301] In Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 at [203] the Administrative Appeals Tribunal held that the centrality of the concepts of science meant that experts are well qualified to comment on what is required to be a scientific experiment. In GQHC and Commissioner of Taxation [2024] AATA 409 , at [236] and [276] that holding was accepted, and the Administrative Appeals Tribunal rejected the applicant’s submission that the expert in that case demanded a “higher standard” of scientific method than was required. During Professor Vandelanotte's evidence, the Tribunal asked him about the standards of science being applied to BBM. Professor Vandelanotte said:[302] Transcript 84, [20]-[40].

I think my standard was just the general scientific method, and I mean I acknowledge that doing good research is very expensive, right. So for example I mentioned in my report studies that included more than 500 participants. That obviously isn't easy to do, right. But the scientific method can be applied even with a lot less funding available. So sort of the principles of science apply to anyone, in my view, and whether that's in or outside a university setting. If you want to generate new knowledge there's only so many ways you can go about achieving that. So even when we do student projects, which basically have no funding and they need to write a thesis to get their undergraduate degree, that sort of research will not compare to the, you know, fully funded randomised control trials that we conduct as well. But those students still have to apply the right principles. If they want to draw a conclusion from something they will have to collect the data in the right way. Even if that's just a simple survey that you can throw online and have people answer. And of course, there's methodological issues with any research you do, even the highly funded research. The more highly funded it probably improves your methodological rigour because you can apply better methods. That's mostly the difference, but even cheap or unfunded research, we still need to apply certain principles from which you can then, with some certainty, infer a conclusion from.

125. In the Expert Report, Professor Vandelanotte stated:[303] Expert Report R2, [59].

In my opinion, the above indicates a lack of understanding of the 'scientific method' by the Applicant. The process specified by the Applicant lacks detail and specificity, and it does not describe the normal and logical progression that includes searching the literature for existing knowledge; formulating research questions or hypotheses based on identified gaps in the literature; designing a study protocol that allows to answer the research questions or hypotheses; recruiting participants; collecting and analysing data, interpreting and discussing outcomes and formulating a conclusion. The above example provided by the Applicant is typical of the approach towards knowledge generation displayed throughout the Briefing Materials and does not resemble in any way how outcomes of experimental research are normally reported in the literature. Most concerning in this, and consistent throughout the Briefing Materials, is the lack of data. No actual data, not in raw or aggregated format, is being presented. Therefore, it is impossible to have any confidence in the outcomes and conclusions formulated by the Applicant.

126. Further, as cited more fully above at paragraph 35(o), Professor Vandelanotte concluded:[304] Expert Report R2, [82]-[83].

For me, the biggest concern is the complete lack of a scientific approach and methodological rigour in developing a research question or hypothesis, developing study protocols, collecting and analysing data, presenting and interpreting results and then extracting logical conclusions from them.

127. In the Tribunal's view, Professor Vandelanotte's above comments relate more to the requirements of subparagraph 355-25(1)(a)(ii) of the ITAA 1997 than to the "principles of established science." Professor Vandelanotte's comments are considered further below in that context.

128. When considering the evidence, the Tribunal notes there is material in the book 'Project You' suggesting that BBM may have considered issues that might be outside of "the principles of established science."[305] For example ‘ Project You’ at T16, 580 “ So, if things create things, and our thoughts are things that have a certain level of energy that vibrates as a certain frequency, then it makes perfect sense that you’re connected to the consciousness of the ‘universal subconscious mind’; that your perception is confirming your reality and the more you feed your illusions and perceptions into this unified field of consciousness then the more your perception of your reality is intensified, as a result it continues to manifest as your reality, whether it is negative or positive.” And at T16, 333 “ Being that the brain is made up of electrons, every time you shift your thoughts onto something or someone you end up changing the rate of vibration, so the movement or displacement of these electrons through your thoughts, beliefs and emotions create the frequencies that impact both your energy and your biochemistry either positively or negatively.” The Expert Report also comments on some of this material at [19] relating to "energy", "vibration", "electron density" and at [11] relating to the inclusion of the vibrosaun and hyperbaric chamber. The Expert Report also focuses (at [49]) on some of BBM's conclusions, particularly in relation to low-calorie diets causing "metabolic, hormonal, physiological damage" which are said to be contrary to established scientific conclusions. I have no other material from either BBM or IISA on this point.

129. A majority of BBM's activities on the six pillars appear to be based on principles of established science (for instance nutrition, sleep science, exercise science, medical science). However, some of the material in 'Project You' might not be based on principles of established science, but it is unclear as to the place of the book in the six pillars program.[306] BBM’s submissions referred to above at [23(d)(ii)] and [24(c)(v)] suggest that Project You did not describe the experimental process but was part of the R&D output. But there are “energy” references in BBM’s material that echo some of the Project You focus. 'Project You' does seem to summarise the six pillars, but the evidence and submissions are not clear on whether all of the aspects in 'Project You' formed part of the six pillars program or not.[307] BBM states “ The book is not a direct reflection of the R&D information but written in a way to entice curiosity” (T20, 635) which might suggest the book is not entirely about the R&D. BBM also says “ its premise of content is directly linked to the outcome in all the tests conducted in the extensive amount of research over the years ” (T14, 199) which might suggest it is entirely about the R&D. I cannot comment on the hyperbaric chamber or vibrosaun concerns in the Expert Report either, as I have little real evidence of their benefits scientifically and the assertions that I do have are general assertions, not specific evidence.[308] For example, Tribunal Book, A3, 327 “ The hyperbaric chamber expanded the research capabilities of the facility, enabling new types of experiments that were not possible before. This added a valuable dimension to the research, allowing for a deeper exploration of how enhanced oxygenation can contribute to overall health and well-being. Overall, the purchase of the portable hyperbaric chamber significantly enriched Claimed Activity 1 by providing advanced tools for recovery, facilitating integrated health practices, and enabling more precise measurement of health outcomes. This enhancement was crucial for advancing the research objectives and improving the effectiveness of the health and well-being programs being developed.” Also, A2, 9 “ The hyperbaric chamber became a critical tool in our integrated approach, allowing for a deeper exploration of the synergistic effects of our health and well-being components .” There is nothing explaining how this was achieved.

130. On the evidence before me, on balance, I have given BBM the benefit of any doubt and find in favour of BBM on this point. I find that BBM's work in the 2019 year was based on principles of established science (for instance nutrition planning, exercise programs, meditation). I have concluded that I have no evidence that the material that caused me pause in 'Project You' formed part of BBM's activities in the 2019 year. In addition, I do not have evidence nor submissions as to whether that material in 'Project You' is part of established science or not. What I do have are the six pillars, all of which, in substance, focus on established science.

131. "[B] ut 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" : The application of subparagraph 355-25(1)(a)(ii) is one of the main issues in this case.

132. IISA says that BBM's evidence does not establish there was a hypothesis, experiments, observation and evaluation or logical conclusions.[309] IISA Closing Submissions [69]-[84]; IISA SFIC [94]-[107]; T1, 10, T1, 15-16. Transcript 123 [26]-[45] to 127 [27]. Professor Vandelanotte's comments cited above at paragraphs 124 to 126 are also relied upon. BBM takes a different view, claiming that the material before the Tribunal demonstrates all of the statutory criteria are met.[310] BBM Closing Submissions [1]-[5], BBM SFIC [20]-[25], [39]-[46], [54]-[76]. Transcript 102 [26]-[46] to 107 [26].

133. The case law is to the broad effect that "hypothesis", "experiment", "observation", "evaluation" and "logical conclusions" each bear their ordinary meaning.[311] For example, Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 , [206]. In terms of these requirements case law suggests the Tribunal must be satisfied from the evidence that each of these steps occurred. In
Rix's Creek Pty Ltd; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645, at [20] the Administrative Appeals Tribunal held:

Evidence must be available to satisfy to satisfy this requirement. Vague, generalised description of the claimed activities is not sufficient to establish that a hypothesis was formulated and that the activities claimed were carried out to test that hypothesis. An ex post facto attempt to construct or discover a hypothesis with the benefit of hindsight after the workers can carried out [sic] will not satisfy the requirement that the activities be "systematic, investigative and experimental"; see
Mount Owen Pty Ltd and Innovation Australia [2013] AATA 573…. at [197], [209], [229] and [241].

134. In Royal Wins Pty Ltd and Innovation and Science Australia
[2020] AATA 4320 at [10], the Administrative Appeals Tribunal held that "to satisfy this component, the Applicant needs to identify a testable scientific hypothesis that it is seeking to test and conduct the testing of that hypothesis in a planned sequence which leads to logical conclusions." In Royal Wins the Tribunal found on the evidence (at [40]) that it could not be satisfied when activities were undertaken, nor that there was a progression of work.

135. In relation the hypothesis, as was noted in Royal Wins at [44], the hypothesis is a proposition to be tested by an experiment and not an objective. BBM claimed that its hypothesis did not change over time.[312] Transcript 102, [35]. I note that there is evidence of change - for example, as is noted in paragraph 25(c) above, the project was stated by BBM to have started off as an app to help mental health and the Application suggests that was the 2019 year. The Expert Report concluded that the hypothesis may have changed over time.[313] Expert Report R2 [62]. Considering the evidence of a hypothesis:

136. IISA's concern is that for there to be an experiment using the scientific method, the hypothesis must be formed at the outset before activities are undertaken and there was no evidence of that.[326] BBM Closing Submissions [65]. IISA put this to Mr Abdallah in cross-examination particularly when considering the 19 March 2024 hypothesis put to the Tribunal.[327] For the avoidance of doubt, I do not accept BBM’s assertion in its Closing Submissions (at 2.2) that IISA did not put evidential inconsistencies to Mr Abdallah in cross examination. From the face of the transcript those issues were put to Mr Abdallah (e.g., Transcript 55, [24]-[46], 56, [1]-[36], 61, [43] and following). Nor do I accept it was improper for IISA Closing Submissions to give a view of the evidence overall; that is usual. At is noted above at paragraph 30(b), Mr Abdallah commented that "That was typed out in 2024 but it was written, handwritten and not as good as that, in the stuff that we got from storage."[328] Transcript 54, [12]-[15].

137. Taking the most favourable view of the evidence for BBM, it could be said that broadly there was a hypothesis relating to testing the isolated vs integrated approach, and that hypothesis must have been a proposition to the effect that the integrated approach was better or more effective. However, this is far from holding there was such a hypothesis as the evidence is inconsistent[329] For example, other hypotheses (which might actually be objectives) are asserted relating to “ to expose flaws in existing information and create ‘brand new’ and conclusive knowledge.” See [24(c)(iv)] above. and, in any event, any such hypothesis appears to have been formulated in or around 2020 or 2021, after BBM's activity had commenced and after the 2019 year. I agree with IISA that the hypothesis is required at the time an experiment commences. I do not accept there was something handwritten that met the standard of a hypothesis and I am not convinced by Mr Abdallah's evidence to that extent. If there was something prepared in 2019 before activities commenced, it was incumbent upon BBM to produce it in evidence. While I have considered BBM's evidence overall, I am not persuaded the asserted hypothesis was present in the 2019 year, and I could be persuaded it was possibly present after the year at issue. For clarity, a major reason for my conclusion in this case is that the Application suggests an entirely different focus at the time the activities commenced in the 2019 year and BBM also acknowledged that at various points during this case.[330] See [23(m)(iii)] and [25(c)] above for example.

138. The other aspects of subparagraph 355-25(1)(a)(ii) also have evidential difficulty for BBM. I have reached the following conclusions:

139. "[B] ut 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)" : IISA has changed its view from the finding and internal review on this aspect, and submits that the Tribunal cannot be satisfied on the evidence that BBM meets this requirement.[353] IISA Closing Submissions, [85] – [88]. As noted above at 16] the Tribunal has all the powers of the original decision maker on review. I note above[354] See [16]. that the Expert Report concludes that the six pillars project is "completely irrelevant as to knowledge generation"[355] Expert Report (R2) [82]. and this conclusion may have partly motivated IISA's changed position. BBM's repeated position is that its activities always had a focus and purpose on generating new knowledge.[356] For example, BBM Closing Submissions, [5] and see above [19], [23(d)(iv)], [23(h)], 30(m)].

140. Focusing first on Professor Vandelanotte's comments cited above, those comments are rejected. The statutory test focuses on the purpose of the work and not the results. Further, as is noted in
PKWK v Innovation and Science Australia [2021] AATA 276 at [350], the definition of "new knowledge" is of wide import and captures new knowledge in the form of something that could not be achieved as much as what can be. Professor Vandelanotte also suggests that to the extent there was any new knowledge, it was not "meaningful."[357] Expert Report (R2), 1345, [32]-[33], 1350, [45], 1368, [82] As was noted in
Rix's Creek Pty Ltd; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645 at [201], there is no requirement for new knowledge to have widespread application. There is also no meaningfulness standard in the legislation.

141. The case law provides (in summary):

142. The 2010 EM states:

2.16 Experimental activities that qualify as core R&D must be for the purpose of acquiring new knowledge or information. This requirement reflects the R&D tax incentive's object of generating the knowledge benefits that arise from conducting R&D - rather than merely subsidising the application of the knowledge produced by R&D. This is particularly relevant where trials are repeated or prolonged, especially if carried out in a production context. The distinction between conducting R&D and applying the results of it (other than in further R&D) is a question of fact. 'New knowledge' in this context means knowledge not already available in the public arena at the time the activities are conducted, in the relevant technology, on a reasonably accessible world wide basis .

2.17 The requirement can be met by the purpose of acquiring or generating knowledge in the practical form of knowledge or information about the creation of new or improved materials, products, devices, processes or services. Where experimental activities occur in the context of normal production activities, the experiments may entail the direct production or use of an actual material, product, device, process or service. (Emphasis added.)

143. While BBM might show there was a purpose, the problem for BBM is that I am not convinced that the activities in the 2019 year had an outcome that could not be known or determined in advice based on knowledge, information and experience at that time. Precedent suggests that this is fatal to BBM as no "new knowledge" could potentially arise. This means that I cannot be satisfied that this aspect of the definition of core R&D activities in section 355-25 is met by BBM.

144. Conclusions : I have concluded that none of BBM's activities in the 2019 year meet the definition of core R&D activities for the following reasons:

Whether Activity 1 was excluded from the definition of core R&D activities by virtue of paragraph (d) of subsection 355-25(2) of the ITAA 1997

145. Paragraph 355-25(2)(d) of the ITAA 1997 provides that "research in social sciences, arts or humanities" is excluded from being core R&D activities. I have found above that for several reasons, BBM's activities in 2019 are not core R&D activities, so strictly this matter does not need to be considered. However, for completeness, and because there is no case law on this particular provision, I do so below. I have concluded that paragraph 355-25(2)(d) of the ITAA 1997 would not apply to exclude BBM's activities if they had been core R&D activities.

146. Considering the arguments, IISA's focus is on BBM's six pillars project being research in social sciences. IISA's conclusion on this aspect was put very weakly - that it "appears to" apply.[362] See [15] above, T1-10 and IISA SFIC [122]-[127]. Presumably it was put in this weak manner in the internal review decision as part of IISA's ongoing complaint that it had insufficient details of BBM's activities. IISA's position was, in essence, that in ordinary meaning "social sciences" is the study of human activity, and that BBM's project related to psychology (in the sense, presumably, of behaviours and habits) and mental health. BBM's argument is that its six pillars program was health-focussed, medical or biomedical in nature, and that IISA's suggestion it was research in social sciences was incorrect.[363] BBM SFIC [107]-[114]; Transcript 42, [13], [42].

147. Taking into account the context, "social sciences" is connected to arts and humanities. It can be maintained under the noscitur a sociis principle of statutory interpretation that those later concepts assist to determine the meaning of "social science." I note that to a limited degree IISA's R&D Tax Incentive Guide to Interpretation supports that approach. It refers to the following non-exhaustive list as falling within the social sciences exclusion - anthropology, business, classics, communication studies, dance, economics, education, fine art, geography, history, literature, music, performing arts, philosophy politics, psychology (other than neuropsychology), sociology, theatre, visual arts.

148. In terms of purpose, the social sciences exclusion was first enacted by the Income Tax Assessment Amendment (Research and Development) Act 1986 (Cth). By way of section 7 of that Act, amongst other matters, subsection 73B(2) was inserted into the Income Tax Assessment Act 1936 (Cth), providing that specified research was not "systematic, investigative or experimental activities" which meant that those matters could be "research and development activities." Included amongst those specified matters was "research in social sciences, arts or humanities." There is nothing noted in the 1986 EM that directly assists in the interpretation of social sciences. In context though, the R&D regime is about industry R&D such as products and processes - not academic research.

149. Cases confirm that broadly, the plain meaning cited by IISA[364] IISA SFIC [124] refers to the Macquarie Dictionary meaning of social science “the systematic study of human activity based on the accumulation and analysis of verifiable data.” On cases, see for example, Maluka and Maluka (2011) FamCAFC 72 refers to social science research on family violence, Air New Zealand v ACCC ; PT Garuda Indonesia Ltd v ACCC [2017] HCA 21 refers to economics as a social science. is correct, that is, that "social science" is about human behaviour/activity. Other resources reviewed by the Tribunal to determine ordinary meaning provide that "social science" involves:

150. My conclusion is that mental health and physical health do not fall within the concept of "social sciences" in the ITAA 1997. Were this the position, medical research could not comprise core R&D activities and that cannot be seriously maintained to be correct.

151. It is clear from the description of the six pillars and from the material before the Tribunal that BBM's activities involve an array of health and medical-focused aspects - for example, nutrition, exercise, sleep, hydration, mindfulness - not merely "psychology" and not merely "sports science" (if it is accepted those matters are each social science). It seems IISA has to some degree relied upon BBM's response to its question referred to in paragraph 24(c)(ix) above (i.e., whether the program was focussed on the mental function and behaviour of individuals when determining whether the social sciences exclusion applied). IISA should have been much clearer with BBM and acted more fairly in explaining what that question was really about as it was clear from BBM's response that it had not appreciated the context of the question. BBM was unrepresented. It is hard to see why IISA took this point in this case as it did not consider all of BBM's six pillars.

152. Even if BBM's activities focused solely on mental health (as is arguably the position from the wording of the Application), I find that the context of BBM's six pillars project demonstrates its reference to mental health is a field of medical science and not a social science.

153. For those reasons I find that paragraph 355-25(2)(d) would not apply.

If the answer is that part of BBM's activities are core R&D activities, whether the remainder of Activity 1 met the definition of supporting R&D activities in section 355-25(1) of the ITAA 1997

154. Section 355-30 of the ITAA 1997 provides the definition of supporting R&D activities as follows:

Supporting R&D activities

  • (1) Supporting R&D activities are activities directly related to core R&D activities.
  • (2) However, if an activity:
    • (a) is an activity referred to in subsection 355-25(2); or
    • (b) produces goods or services; or
    • (c) is directly related to producing goods or services;

      the activity is a supporting R&D activity only if it is undertaken for the dominant purpose of supporting core R&D activities.

155. As there is a requirement that supporting R&D activities are directly related to core R&D activities, and as I have found that none of BBM's activities in the 2019 year satisfy the core R&D activities definition, there can be no supporting R&D activities.

Overall Conclusions

156. I conclude that:

157. This means that IISA's internal review decision is varied so that the conclusion that paragraph 355-25(2)(d) of the ITAA 1997 applied is set aside. The decision is otherwise affirmed.

Footnotes

[1] Referred to in error on that document as “Statement of Facts, Issues and Contingencies.”
[2] This matter was originally filed in the Administrative Appeals Tribunal and has been transferred to this Tribunal, in accordance with Part 5 of Schedule 16 of the Administrative Review Tribunal (Consequential and Transitional Provisions No.1) Act 2024 (Cth).
[3] T1.
[4] On occasion in the evidence Activity 1 is referred to as “Activity 1.1.” For the avoidance of doubt, the Tribunal has considered the two references as interchangeable. The two references are due to BBM’s Application referring to “Activity 1” and “Activity 1.1” for the same thing (see T4, 123).
[5] T4. In Mr Abdallah’s evidence before the Tribunal, he referred to advice from a bookkeeper prior to lodging the application, and that BBM’s accountant S Baker & Co lodged the registration application – Transcript 47, [40], [44]. In cross-examination by Ms Smith Mr Abdallah conceded that there had been two prior registration applications by BBM: Transcript 51, [20], [22], also T32, 697. This is of no particular significance to this case.
[6] T5.
[7] T7.
[8] T15.
[9] T16 and published by Michael Abdallah.
[10] T8, T9, T10, T11, T12, T13, T14, T17, T18, T19.
[11] T9 Commonwealth of Australia 2020.
[12] T13.
[13] T20.
[14] T25, T26, T30, T31, T32 and T40.
[15] T28, T30, T31 and T34.
[16] T21 to T40.
[17] T41, 771.
[18] T41.
[19] The reasoning for this was a conclusion that all of the outcomes could “ be predetermined on the basis of knowledge, information or experience available in the medical/health sciences field when the Activity began in 2018 .” T41, 772.
[20] IISA stated that the company did not provide evidence that it held a hypothesis at the beginning of the activity nor that the hypothesis was tested, T41, 772.
[21] T44, T45, T46.
[22] T44 and T58.
[23] T58. Note T1, 19 suggests the draft internal review decision was dated 12 December 2022 which seems incorrect. T1, 21 to T1, 58 forms BBM’s response to that draft internal review decision.
[24] T1.
[25] The reasoning for this was a conclusion that all of the outcomes could “ be predetermined on the basis of knowledge, information or experience available in the medical/health sciences field when the Activity began in 2018. ” T1, 10.
[26] IISA stated that the company did not provide evidence that it held a hypothesis at the beginning of the activity nor that the hypothesis was tested – T1, 10.
[27] T1, 10.
[28] T1, 10. Also IISA SFIC [122]-[128].
[29] IISA SFIC [108]; IISA Closing Submissions [106], [107].
[30] Expert Report R2, for example [82] “ I assessed Claimed Activity 1 as completely irrelevant in terms of knowledge generation .”
[31] T1, 1.
[32] T4.
[33] This is further described by BBM in the IISA phone note at T24, 648. The Tribunal notes that BBM explained at the hearing that the touchscreen had been a ‘flop’ and was abandoned – Transcript 34, [34], p38, [1], [11].
[34] T1, 27 and T24, 648.
[35] The examination period is the period up to the finding being issued, and prior to the application for an internal review by BBM.
[36] Adapted from wording in T16, 609, 610.
[37] T8, T10.
[38] T11.
[39] T15.
[40] T14.
[41] T16.
[42] The Academy curriculum is also mentioned at T55, 850, and T1, 24.
[43] For instance, T18, 627, an ice addict and additional clients following a TV spot. Also referred to at T24, 648 was a formerly suicidal client, and at T25, 652, 653, other clients/participants are referred to, such as one on the autism spectrum, and another with a very stressful job. At T51, 826 further clients are referred to. The transcript also refers to clients e.g., 35, [20], [40]. The point made by BBM was that its project was designed to assist people with an array of differing needs.
[44] T20.
[45] T7.
[46] T16.
[47] T9, 156.
[48] There is some correlation to [2.11] of the 2010 EM but this wording still is not accurate even to that comment.
[49] T24.
[50] T25.
[51] T25, 662 and T4 (see [19] above) refer to the facility as a “factory.”
[52] T25, 652 and T25, 662.
[53] T25, 662. The Tribunal notes that in its response to the draft internal review decision (see T1, 24) BBM confused the use of the facility in carrying out BBM’s “core activity” in its R&D project with the creation of the facility. IISA was saying the facility was not created in the 2019 year so the pictures showing that creation are not relevant to the 2019 year.
[54] T25, 655. These included static posture assessment, physiological load test, food log journals, nutrition and lifestyle assessments, abdominal wall function, and occasionally blood and saliva tests. The latter tests were also discussed in evidence before the Tribunal – Transcript 42, [1]–[21]. Mr Abdallah also gave evidence that there was weekly feedback of individual outcomes and biometric data taken weekly – Transcript 42, [35], [30]. In cross-examination Mr Abdallah conceded BBM had not advised IISA of some of these tests previously – Transcript 61, [20], [41].
[55] Cross-examination of Mr Abdallah, Transcript 61, [20], [47].
[56] T25, 661.
[57] T25, 660.
[58] T28.
[59] T30.
[60] In cross-examination, Mr Abdallah clarified that what he meant was what the outcome of the hypothesis could be and whether it was correct could not be predetermined – Transcript 51 [1], [15].
[61] In evidence before the Tribunal, Mr Abdallah said that refinements were made over time as control group testing did not work -Transcript 38, [39].
[62] See [23(i)] of these reasons and T25.
[63] See footnote 54 of these reasons and T25, 655.
[64] T31.
[65] T9.
[66] T31, 694.
[67] T32.
[68] This material is comprised of what appears to be exercise programs and a document showing various assessments undertaken (e.g., length/tension assessment and physiological load assessment). See T32, 699 to T32, 707. Examples of journals (which deal with matters such as mood, and nutrition) are included at T57, 856 to T57, 864.
[69] T33.
[70] T33, 709.
[71] Transcript 42, [30], [45] refers to the inclusion of a vibrosaun and hyperbaric chambers.
[72] Tribunal Book A3, 311-312.
[73] Tribunal Book A3, 318.
[74] Tribunal Book A2, 12-13.
[75] While BBM refers to this as a “ central mobility integration area ”(Tribunal Book A3, 320) it is very hard to see the substance of what BBM is claiming here given it is merely moving gym equipment into one space.
[76] Tribunal Book A3, 320 “ Experiments were conducted in isolated rooms and sections with a focus on individual health components. For example, participants would engage in physical activities in one room or area and then move to another room for mindfulness exercises.”
[77] Tribunal Book A3, 319 – these seem to be focused on lighting and sound.
[78] T40.
[79] T41, 771.
[80] T44.
[81] T51.
[82] T52.
[83] T55.
[84] T55, 845.
[85] T55, 846.
[86] T16.
[87] Referenced there are Biochemist Roger William and his book ‘ Biochemical Individuality ’ (no reference details are cited) , a book ‘ Nutrition and Physical Degeneration ’ from the 1930s and a book ‘ Metabolic Type Diet ’ (no authors or reference details cited) and Weston A Price is referred to as undertaking extensive research in South America (no reference details are cited).
[88] T55, 850.
[89] T55, 848.
[90] In Mr Abdallah’s evidence he referred to a board of directors that included the CEO of Go Latitude and Nick Bell who was on Shark Tank. Transcript 37, [37], [40]. The evidence before the Tribunal does not set out the composition of the BBM board, and the material is contradictory with Mr Abdallah stating in evidence that he was the director of BBM (Transcript 38, [16]). This point is of little significance to the matter before the Tribunal but reflects the confusing nature of the evidence at times.
[91] T57.
[92] T56.
[93] T57.
[94] T58.
[95] T1, 22, and particularly T1, 25 “ The algorithm created allows the program to change – the algorithm is reliant on the transparency of each individual’s data input (through the App’s onboarding process and the unlocking of the Pillars) to be able to populate the most accurate and tailor, made individualised program. Unique to that person’s circumstance and/or requirements .” It is noted that BBM’s submissions appear at T59 as well. To avoid repetition, the T1 references are referred to by the Tribunal instead of T59.
[96] T1, 26.
[97] T1, 26.
[98] T1, 24.
[99] T1, 26.
[100] T1, 29.
[101] T1, 21 to T1, 57.
[102] T58.
[103] T1, 33 to T1, 56.
[104] This was also disputed in Mr Abdallah’s evidence – Transcript 42, [13], [42].
[105] T1, 9.
[106] Each document mentioned was also copied to IISA.
[107] Tribunal Book A2, 2-44.
[108] Transcript 54, [5]-[33].
[109] See [30(b)] below for further detail about the cross-examination of Mr Abdallah on this point.
[110] Tribunal Book A3, 337.
[111] Tribunal Book A3, 339.
[112] Tribunal Book A3, 341.
[113] Tribunal Book A3, 72.
[114] Tribunal Book A3, 86.
[115] Tribunal Book A3, 155.
[116] Tribunal Book A3, 162.
[117] Expert Report R2, [54].
[118] Tribunal Book A3, 259.
[119] Tribunal Book A3, 45.
[120] Tribunal Book A3, 312-313.
[121] Tribunal Book A2, 31 and A3, 63.
[122] Tribunal Book A2, 32 and A3, 64.
[123] Tribunal Book A2, 35.
[124] Tribunal Book A2, 36 and A3, 68.
[125] BBM Tribunal materials - provided 1 November 2024.
[126] Tribunal Book A2, 39.
[127] Tribunal Book A3, 273.
[128] Tribunal Book A3, 277.
[129] Tribunal Book A3, 282.
[130] Tribunal Book A3, 277 and A3, 325.
[131] See for example the phone note at T24.
[132] T1, 33 to T1, 56.
[133] Mr Abdallah described this as a “funnel” (Transcript 37, [2]) and “mix” is the Tribunal’s word.
[134] Transcript 33, [5], [25].
[135] Transcript 42, [31], [35].
[136] Transcript 53, [30], [45], 54 [13], [14].
[137] Transcript 53, [44], [45].
[138] Transcript 54, [20], [47]; 55, [17], [20].
[139] Transcript 34, [15].
[140] Transcript 57, [20], [22].
[141] Transcript 33, [42], [46].
[142] Transcript 38, [23], [27]. Reference is also made to “Dr Robin Wilcott” in evidence before the Tribunal: Transcript 106, [36]. The Tribunal understands from Tribunal Book A3, 311 that Northern Hire was engaged in construction work for BBM but as is noted above at [23(p)] it is unclear what was done by Northern Hire in the 2019 year.
[143] Transcript 34 [34], [45], 35 [1], [7].
[144] Transcript 60, [15], [47].
[145] Transcript 58, [26], [47].
[146] Transcript 35, [42], [46], p 36 [1], [3].
[147] Transcript 55, [25], [47], p 56 [1], [36].
[148] IISA Closing Submissions [27].
[149] Transcript 36, [32]. Tribunal Book A2, 3 and A3, 133, 145, 291, 296, 300, 310, 313.
[150] Tribunal Book A3, 45.
[151] With the ‘touchscreen’ being a flop and abandoned (per Mr Abdallah’s evidence Transcript 34, [34], 38, [1], [11]) this evidence may either mean in the income year the touchscreen was still being used, or in fact that this was the app on which these details were recorded. That is unclear.
[152] Transcript 36, [40], [47].
[153] Transcript 42 [15], [30].
[154] Transcript 57, [14], [15].
[155] Transcript 36, [25], [33].
[156] Transcript 42, [30], [46]. Tribunal Book A2, 10 refers to the vibrosaun as “ a unique means to combine movement with mindfulness and recovery .” No details are given as to how that occurs. Tribunal Book A3, 327 states that the hyperbaric chamber “ enabled the integration of breathing and mindfulness practices within a high-oxygen environment. This facilitated the study of synergistic effects when combining multiple health interventions, leading to more comprehensive data on the benefits of integrated health practices .” There is no evidence produced about why high oxygenated environments improve integration of the six pillars, and no data. I am not convinced that breathing and mindfulness could not have been integrated outside of the use of the chamber.
[157] Transcript 37, [10], [27]. This appears to mainly refer to the documents referenced in footnote 68 above.
[158] Transcript 56,[38], [45]; p57, [1], [47], p58, [1], [47], p59, [1], [5].
[159] Transcript 58, [43].
[160] Transcript 59, [23], [25].
[161] Transcript 59, [43], [45].
[162] Transcript 62, [7], [37].
[163] Transcript 38, [39].
[164] Transcript 41, [28], [42]. Mr Abdallah said in his evidence that IISA’s expert, Professor Vandelanotte, noted that there were complexities and uncertainties when combining multiple health interventions – see Transcript 39, [43]. That was disputed by IISA as not an accurate reflection of Professor Vandelanotte’s evidence: IISA Closing Submissions [34].
[165] Transcript 58, [26], [47]. The Tribunal understands this high-level evidence to be material such as the diagrams at T1, 32 and T1, 57.
[166] Transcript 42, [30], [46] the new equipment referred to is the vibrosaun and the hyperbaric chambers. BBM’s evidence was that this resulted in the need to reconfigure the facility.
[167] Transcript 43, [20], [32].
[168] This document is referred to above [27(b)(viii)].
[169] For example, www.austlii.edu.au.
[170] BBM Closing Submissions 8 and 9. Transcript 96, [15]-[18].
[171] Transcript 31, [22].
[172] Expert Report R2 2, [1]-[12]; [84]-[85].
[173] For example, [23(p)] above.
[174] Expert Report R2 [11].
[175] This point is repeated in the Expert Report R2, [51.1].
[176] BBM’s Closing Submissions, 8-9.
[177] Transcript 83, [30]. BBM’s Closing Submissions, 8 [5], and BBM’s Articles Submission [8]-[9].
[178] For example, BBM’s Closing Submissions, 8, “Key questions raised during cross-examination” and 9.
[179] BBM Closing Submissions, 9, [4].
[180] BBM Closing Submissions, 9.
[181] BBM Articles Submission, 8-9.
[182] The Administrative Review Tribunal’s “ Guideline on persons giving expert and opinion evidence” is to similar effect.
[183] BBM noted in its application for review (T1) that it also has a case before the Tribunal involving the ATO.
[184] Section 355-50 of Schedule 1 to the Taxation Administration Act 1953 (Cth) and section 47 of the IR&D Act. This is what happened here. There is nothing whatever inappropriate about that, as both regulators have duties to ensure that the R&D tax incentive program is administered appropriately, and the integrity of the program is maintained.
[185] Section 355, 25 and section 355, 30 of the ITAA set out the definitions of core R&D activities and supporting R&D activities .
[186] Sections 28A, 27A, 27B, 27F, 27J, 30D of the IR&D Act.
[187] Subdivision 355, C of the ITAA 1997.
[188] T8, 140. Again, there is nothing uncommon nor inappropriate about this.
[189] Review Panel report Review of the R&D Tax Incentive (4 April 2016) at page 5 and page 7. See also Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25].
[190] Explanatory Memorandum to the Industry Research and Development Amendment (Industry Innovation and Science Australia) Bill 2021 (Cth), 1.
[191] See [44] to [49] above.
[192] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 55 [78]; Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25] and section 15AA of the Acts Interpretation Act 1901 (Cth).
[193] For example, Expert Report R2, [75] Professor Vandelanotte refers to data storage by universities as a comparative. At [59] Professor Vandelanotte refers to the way experimental research is reported in academic literature and scientific journals as a comparative providing commentary on what science journals do and do not accept (see [35(k)] above for the full quotation). At [54] Professor Vandelanotte refers to the ‘real research world’ which can only be assumed to be academia. At [59] Professor Vandelanotte refers to how things are “normally reported in the literature.”
[194] T13.
[195] As is required by [2.2(3)] of the Industry Research and Development Decision-making Principles 2022 (Cth) and [2.2(3)] of the earlier iteration (applicable to BBM’s case) - the Industry Research and Development Decision-making Principles 2011 (Cth). For the avoidance of doubt, the Tribunal finds that IISA did comply with the decision-making principles in this matter and makes no negative findings against IISA in this regard.
[196] See [30(f)] above.
[197] Expert Report (R2), 1361.
[198] For example, BBM’s use of “empirical” “iterative” “protocols” “systematic” “experiments” or “experimentation” and even “systematic experimentations” permeates the documentation on the T documents, see T1, 21, T4, T20, T57, T59. The material may have been clearer if BBM had felt it could evidence what it “tested” and why.
[199] For instance, see BBM’s application for registration (T4), referred to at [18] above, and BBM’s email dated 14 November 2021 (T25) referred to at [23(h)] above.
[200] 2010 EM [2.11].
[201] See [23(m)(iii)] above. BBM’s Closing Submissions also referred to the outcome of the hypothesis as not being known in advance. The statutory test is about whether the outcome of the activities could be known in advance, and it appears that is what BBM meant.
[202] T1, 33 to T1, 56.
[203] The Tribunal specifically acknowledges that certain IISA staff in this case did try and assist BBM, particularly IISA’s Ms Jensen-Pull’s efforts in the examination process on the issue of the hypothesis – see for example the phone note T24. This is to be encouraged.
[204] Coal of Queensland v Innovation and Science Australia [2021] FCAFC 54 [131]-]134]; Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 [47].
[205] For example, see BBM evidence and submissions referred to above [19], [23(d)(iii)], [23(h)], [24(c)(iii)], [24(c)(iv)], [24(g)(ii)], 30(k)], [30(l)], [30(m)]. BBM SFIC [12]. BBM Closing Submissions 2, 4, 5, 6.
[206] T1, 24.
[207] See Macquarie Dictionary (9 th ed, 2024).
[208] With “current’ being the 2019 year.
[209] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 55 [78]; Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25]. Pursuant to section 15AA of the Acts Interpretation Act 1901 (Cth) an interpretation that best achieves the object of the legislative provision is to be preferred.
[210] See for example BBM’s evidence noted above at [23(g)], [23(j)], [23(k)], [24(c)(ii)], [24(c)(iii)], [24(c)(v)], [24(c)(vi)], [24(e)], [24(g)(ii)], [24(g)(iv)], [27(b)(iii)], [30(a)], [30(l)] [30(m)]. Also, for example BBM SFIC [12], [14], [16], [34], [41], [44], [48], [49], [58], [167]. BBM’s Closing Submissions 7, [6] amongst an array of other submissions.
[211] See [30(l)] above as an example.
[212] Transcript 40, [10]-[15].
[213] The Tribunal’s observations were upheld on appeal.
[214] I note that BBM uses “isolated”, “linear” as well as “static” and “fragmented” (see BBM SFIC [157]) to describe a non-integrated process. There seems no intended difference between these words although the latter words appear to be used in critique of existing knowledge and information.
[215] Expert Report R2, [16] and [38] – [51].
[216] Expert Report R2, [44].
[217] Expert Report R2, [41]. Individualisation is also concluded to be known to be more effective – Expert Report R2, [42].
[218] Expert Report R2, [47]-[51].
[219] Expert Report R2, [52]-[53].
[220] See [23(c)], [23(d)(ii)], 23(m)(iii)] above.
[221] Transcript 72, [3]-[10].
[222] Transcript 85, [22]-[25].
[223] Professor Vandelanotte accepted in cross examination that he found no such studies – Transcript 82,[4]-[19]. Also see [35(f)] above for a fuller quote from the Expert Report.
[224] Transcript 71, [36]-[46] and 72, [1]-[8].
[225] Transcript 72, [14].
[226] Transcript 72, [19]-[47].
[227] For example, BBM evidence and submissions referred to above [23(d)(ii)] considered a “one or two dimensional health program”, [23(m)(iii)] involved considering existing studies, [23(h)] existing information is acknowledged as being used to “expose the gaps”, [23(m)(v)] BBM itself looked at one or two pillars initially, at [24(c)(ii)] and [30(a)] existing information was “quite linear.”
[228] Transcript 57, [20], [22].
[229] See [30(c)] and [30(g)] above. Also note that BBM acknowledges that an isolated approach on occasion involved two or more pillars at once – see [23(m)(v)] above.
[230] Transcript 82, [42].
[231] Transcript 85, [22]-[24].
[232] This was also noted by IISA in IISA Closing Submissions at [35].
[233] Transcript 57, [20], [22].
[234] I note that BBM also seems to have accepted some of the outcomes could be known in advance – for instance see [23(j)] above which refers to a BBM submission about shallow breathing causing participants to crave stimulants, and BBM noted it being backed by medical research.
[235] Moreton Resources Ltd v Innovation and Science Australia [2019] FCAFC 120 , [143(e)] confirms that the activities are the “hinge” of subsection 355-25(1) of the ITAA 1997.
[236] There is a suggestion that some pillars will work together. See [23(m)(v)] above.
[237] See [27(b)(iv)] above.
[238] See the comments at [27(b)(vi)] above.
[239] See also the discussion at [35(j)] above.
[240] Transcript, 38 [39]. BBM seems to be suggesting that control group testing was actually merely the individual participants tested in an individual setting.
[241] Transcript, 38, [35]-[47]. 39 [1]-[6].
[242] See [82(g)] above.
[243] Transcript 85, [21]-[25], [29]-[47], 86, [4]-[16], [22]-[43].
[244] T1,36.
[245] See [23(g)] above.
[246] See for example [27(b)(iii)], [30(k)],[30(m)].
[247] See 18]-[21] and [23(e)] above.
[248] See [24(e)] and [24(g)(iii)] above.
[249] BBM SFIC [87].
[250] BBM SFIC, [60].
[251] BBM SFIC [3].
[252] See [24(g)(v)] above and T1, 29.
[253] See [27(b)(iii)] and [27(c)] above. Also, A3, 277 and A3, 325.
[254] BBM Closing Submissions 11. See also BBM SFIC [3], [5] which are to similar effect.
[255] See [23(p)] and [30(m)] above new product in the form of an “adaptive algorithm.” T1, 25.
[256] See 24(g)(i)] above.
[257] See [24(g)(ii)] above.
[258] T52, 913.
[259] See [23(d)(v)] above.
[260] A2, 10.
[261] See [27(c)] above and T59.
[262] Such as fit bits available in 2018.
[263] Transcript 58, [26], [47].
[264] Transcript 34, [34], [45], 35 [1], [7]. See [23(e)] and [30(e)] above.
[265] Expert Report R2, [4]-[6], and [20]-[21].
[266] BBM SFIC [151]-[156].
[267] BBM SFIC [78].
[268] BBM SFIC [78], [83] for example.
[269] I note that the comments of the Full Federal Court in Moreton Resources Limited v Innovation and Science Australia [2019] FCAFC 120 , [151] are to the effect that the test in paragraph 355-25(1)(b) of the ITAA 1997 (that is, considering whether the activities are conducted for the purpose of generating new knowledge ) can be satisfied to activities that apply existing technology to a new site; not this aspect of the definition of core R&D activities in subsection 355-25(1) of the ITAA 1997. This is considered further below.
[270] BBM SFIC [80].
[271] See [27(b)(iii)] and [27(c)] above. Also, A3, 277, A3, 325 and A3, 341.
[272] See BBM evidence and submissions referred to above focusing on the personalisation/individualisation of the six pillars process, and the different variables that were required as a result in the app and its algorithm: for example see above [23(g)], [24(c)(ii)], [24(c)(iii)], [24(c)(v)], [24(e)], [24(g)(ii)], [30(a)], [30(k)].
[273] 1996 EM, [9.52]. The 1986 legislation enacted the first version of the R&D regime.
[274] Transcript 49, [10]-[20].
[275] Transcript 125, [1]-[16].
[276] For example, Division 900 of the ITAA 1997.
[277] T9, 179-180.
[278] T8, T34, 712 and T36, 716, T28, 676, T29, 670, T30, 685. Also, T9, 154, T9, 156, T9, 158 are examples in the R&D Tax Incentive Guide to Interpretation where IISA’s expectations are set out, including that there is documentation, numerical data and an array of other matters. T9, 179 states that ‘ Evidence can include written records, oral statements and expert opinions . IISA Closing Submissions continued this focus, for instance [43], [66], [67], [68], [71], [83], [106]. Also, Transcript 53, [19], [34].
[279] T31, 694, Transcript 39, [14], [23], Transcript 49, [14], [15] [19].
[280] T30 and T61. In fairness to IISA, T30 was following up contemporaneous records BBM said it had. However, the photos themselves were provided with T25, and nowhere in that document does BBM assert when it constructed its “laboratory”, so IISA read that in.
[281] Tribunal Book R1, 1098 and the same document at T32, 697.
[282] Coal of Queensland v Innovation and Science Australia [2021] FCAFC 54 [113]; Commissioner of Taxation v Bogiatto [2020] FCA 1139 [100] – [102]; Rix’s Creek Pty Ltd ; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645 [21] and [142]; PKWK v Innovation and Science Australia [2021] AATA 276 [268], [270].
[283] That is not the “hypothesis”, which is an issue considered below.
[284] See the material provided to the Tribunal and referred to above at [27(b)(iv)] [27(b)(v)], [27(b)(vi)], [27(b)(vii)], and [27(b)(ix)]. Also see T32, 699-707.
[285] The suggestion is that there was contemporaneous evidence that might be in storage, or evidence that is no longer available (such as app data): T32, 697-698. IISA’s concern about this is set out in IISA Closing Submissions at [74].
[286] Transcript 106, [5]-[10], see also [23(m)(iv)] above which cites submissions from BBM related to app data amongst other matters.
[287] The suggestion is contemporaneous evidence is in storage (T32, 697-698) and there was a suggestion that privacy concerns may prevent that material being provided (Transcript 36, [10]). This latter point seems particularly unconvincing given the material that BBM did produce of tests undertaken by participants with personal details redacted.
[288] See the material provided to the Tribunal and referred to above at [27(b)(iv)], [27(b)(v)], [27(b)(vi)], [27(b)(vii)], and [27(b)(ix)].
[289] Transcript 32, [20]-[46] to 44, [10].
[290] See, for example, the material referred to above at [23(i)], [23(m)(i)], [23(m)(ii)], [23(m)(iii)], [23(m)(iv)].
[291] For example, T30, 684.
[292] Transcript 33, [42], [46]. Also, T32, 697.
[293] T25, 653 and T30, 687-688.
[294] A3, 288.
[295] A2, 3-11.
[296] For example, T25, 655, 659, 661-662.
[297] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 55 , [78]; Havilah Resources Ltd v Innovation and Science Australia [2020] AATA 933 [25]. Pursuant to section 15AA of the Acts Interpretation Act 1901 (Cth) an interpretation that best achieves the object of the legislative provision is to be preferred.
[298] Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 , [74]; GQHC and Commissioner of Taxation [2024] AATA 409 , [247].
[299] Such as the Frascati Manual, cited in GQHC and Commissioner of Taxation [2024] AATA 409 , [237]. Rix’s Creek Pty Ltd ; Bloomfield Collieries Pty Ltd and Innovation Australia [2017] AATA 645 , [20] all supports this approach.
[300] IISA Closing Submissions [69]-[84].
[301] In Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 at [203] the Administrative Appeals Tribunal held that the centrality of the concepts of science meant that experts are well qualified to comment on what is required to be a scientific experiment. In GQHC and Commissioner of Taxation [2024] AATA 409 , at [236] and [276] that holding was accepted, and the Administrative Appeals Tribunal rejected the applicant’s submission that the expert in that case demanded a “higher standard” of scientific method than was required.
[302] Transcript 84, [20]-[40].
[303] Expert Report R2, [59].
[304] Expert Report R2, [82]-[83].
[305] For example ‘ Project You’ at T16, 580 “ So, if things create things, and our thoughts are things that have a certain level of energy that vibrates as a certain frequency, then it makes perfect sense that you’re connected to the consciousness of the ‘universal subconscious mind’; that your perception is confirming your reality and the more you feed your illusions and perceptions into this unified field of consciousness then the more your perception of your reality is intensified, as a result it continues to manifest as your reality, whether it is negative or positive.” And at T16, 333 “ Being that the brain is made up of electrons, every time you shift your thoughts onto something or someone you end up changing the rate of vibration, so the movement or displacement of these electrons through your thoughts, beliefs and emotions create the frequencies that impact both your energy and your biochemistry either positively or negatively.”
[306] BBM’s submissions referred to above at [23(d)(ii)] and [24(c)(v)] suggest that Project You did not describe the experimental process but was part of the R&D output. But there are “energy” references in BBM’s material that echo some of the Project You focus.
[307] BBM states “ The book is not a direct reflection of the R&D information but written in a way to entice curiosity” (T20, 635) which might suggest the book is not entirely about the R&D. BBM also says “ its premise of content is directly linked to the outcome in all the tests conducted in the extensive amount of research over the years ” (T14, 199) which might suggest it is entirely about the R&D.
[308] For example, Tribunal Book, A3, 327 “ The hyperbaric chamber expanded the research capabilities of the facility, enabling new types of experiments that were not possible before. This added a valuable dimension to the research, allowing for a deeper exploration of how enhanced oxygenation can contribute to overall health and well-being. Overall, the purchase of the portable hyperbaric chamber significantly enriched Claimed Activity 1 by providing advanced tools for recovery, facilitating integrated health practices, and enabling more precise measurement of health outcomes. This enhancement was crucial for advancing the research objectives and improving the effectiveness of the health and well-being programs being developed.” Also, A2, 9 “ The hyperbaric chamber became a critical tool in our integrated approach, allowing for a deeper exploration of the synergistic effects of our health and well-being components .” There is nothing explaining how this was achieved.
[309] IISA Closing Submissions [69]-[84]; IISA SFIC [94]-[107]; T1, 10, T1, 15-16. Transcript 123 [26]-[45] to 127 [27].
[310] BBM Closing Submissions [1]-[5], BBM SFIC [20]-[25], [39]-[46], [54]-[76]. Transcript 102 [26]-[46] to 107 [26].
[311] For example, Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 , [206].
[312] Transcript 102, [35].
[313] Expert Report R2 [62].
[314] See [18] above.
[315] See [24(c)(iv)] above.
[316] T20, 636.
[317] T1, 21.
[318] T20, 636.
[319] Expert Report R2, [62].
[320] T1, 34-56.
[321] A2,2.
[322] A3, 287, 298, 302.
[323] BBM SFIC [86], also [11], [20].
[324] Transcript 42, [31]-[33].
[325] BBM Closing Submissions [1].
[326] BBM Closing Submissions [65].
[327] For the avoidance of doubt, I do not accept BBM’s assertion in its Closing Submissions (at 2.2) that IISA did not put evidential inconsistencies to Mr Abdallah in cross examination. From the face of the transcript those issues were put to Mr Abdallah (e.g., Transcript 55, [24]-[46], 56, [1]-[36], 61, [43] and following). Nor do I accept it was improper for IISA Closing Submissions to give a view of the evidence overall; that is usual.
[328] Transcript 54, [12]-[15].
[329] For example, other hypotheses (which might actually be objectives) are asserted relating to “ to expose flaws in existing information and create ‘brand new’ and conclusive knowledge.” See [24(c)(iv)] above.
[330] See [23(m)(iii)] and [25(c)] above for example.
[331] There are additional issues for BBM from my earlier conclusions about whether the outcome of its activities could be known in advance in future years.
[332] See [82(g)] above, and Transcript 82, [39]-[47].
[333] See [23(m)(i)] above.
[334] BBM SFIC [100].
[335] Ibid.
[336] BBM SFIC [101].
[337] It appears there is a difference of view on what “data” is between BBM and IISA. The Tribunal has treated the material in the Tribunal Book at A3 (such as A3, 264-272) as “data.”
[338] Macquarie Dictionary, Ninth Edition, 2024 – definition of “experiment.”
[339] See above at [27(b)(iv)].
[340] Macquarie Dictionary, Ninth Edition, 2024 – definition of “observation.”
[341] BBM Closing Submissions “Systematic Methodology and Documentation” at [2].
[342] BBM Closing Submissions “Objective Data Collection and Iterative Analysis” at [4].
[343] See [27(b)(ix)] above.
[344] For example, T25, 655, 659, 661-662.
[345] Tribunal Book A3, 315.
[346] Tribunal Book A3, 315.
[347] Tribunal Book A3, 323.
[348] See [30(d)] above.
[349] T1, 34-56.
[350] Tribunal Book A3, 325.
[351] For example, Tribunal Book A3, 314 sets out a list of matters that BBM says it did, without any method description. In addition, saying “ All data collected from the observational studies, daily logs, and weekly coaching sessions were systematically recorded and analysed. This structured approach ensured that the preliminary data was accurate, comprehensive, and useful for informing subsequent phases of the research ” is not a replacement for evidence of how the data was evaluated. The material on Tribunal Book A3, 315 talks about “analysis” but there is no evidence of it, nor how it was linked logically to information conclusions reached.
[352] For example, T25, 655, 659, 661-662.
[353] IISA Closing Submissions, [85] – [88]. As noted above at 16] the Tribunal has all the powers of the original decision maker on review.
[354] See [16].
[355] Expert Report (R2) [82].
[356] For example, BBM Closing Submissions, [5] and see above [19], [23(d)(iv)], [23(h)], 30(m)].
[357] Expert Report (R2), 1345, [32]-[33], 1350, [45], 1368, [82]
[358] A similar holding was referred to in Coal of Queensland v Innovation and Science Australia [2021] FCAFC 54 , at [119] that the purpose of the activities was to reiterate the existing state of knowledge.
[359] Similarly, in Re GQHC and Commissioner of Taxation [2024] AATA 409 the Administrative Appeals Tribunal held at [385]-[387] that the outcome of the incubation project (further described above at [81]) could be known in advance, and this meant that it was not undertaken for the purpose of generating new knowledge.
[360] Coal of Queensland v Innovation and Science Australia [2021] FCAFC 54 , [121].
[361] PKWK v Innovation and Science Australia [2021] AATA 276 , [347].
[362] See [15] above, T1-10 and IISA SFIC [122]-[127].
[363] BBM SFIC [107]-[114]; Transcript 42, [13], [42].
[364] IISA SFIC [124] refers to the Macquarie Dictionary meaning of social science “the systematic study of human activity based on the accumulation and analysis of verifiable data.” On cases, see for example, Maluka and Maluka (2011) FamCAFC 72 refers to social science research on family violence, Air New Zealand v ACCC ; PT Garuda Indonesia Ltd v ACCC [2017] HCA 21 refers to economics as a social science.
[365] ‘What is social science?’, UK Research and Innovation (Webpage, 31 May 2023) < Social science disciplines – UKRI>.
[366] Robert A. Nisbet and Liah Greenfield, ‘social science’, Encyclopaedia Brittanica (online, 3 December 2024) < Social science | History, Disciplines, Future Development, & Facts | Britannica>.
[367] ‘Social Science Disciplines (Fields of Research)’, Academy of the Social Sciences in Australia (Webpage, 7 March 2023) < Social Science Disciplines (Fields of Research) | Academy of the Social Sciences in Australia>.
[368] Ibid.
[369] ‘What is social science?’, UK Research and Innovation (Webpage, 31 May 2023) < Social science disciplines – UKRI>.
[370] Australian Bureau of Statistics, Australian and New Zealand Standard Research Classification (ANZSRC) (30 June 2020) < Australian and New Zealand Standard Research Classification (ANZSRC), 2020 | Australian Bureau of Statistics> and ‘Social Science Disciplines (Fields of Research)’, Academy of the Social Sciences in Australia (Webpage, 7 March 2023) < Social Science Disciplines (Fields of Research) | Academy of the Social Sciences in Australia>.
[371] See “Select social science disciplines” at ‘About the Social Sciences’, Academy of the Social Sciences in Australia (Webpage) <The Social Sciences - State of the Social Sciences>.

 

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