DZXP, KRQD and QJJS and Innovation and Science Australia [2017] AATA 576 (19 April 2017)

Head company of consolidated or multiple entry consolidated (MEC) group.

1. That information was factually inaccurate because, as previously stated, QJJS was not the head entity of a MEC group at the time of making its applications but, rather, was the wholly owned subsidiary member of a MEC group.
2. Further, in completing their respective application forms, DZXP, KRQD and QJJS each made a "Declaration" that the information provided in the form was true and correct in material detail. Clearly, it was not. Innovation Australia then relied upon the incorrect information provided by DZXP, KRQD and QJJS, and their "Declarations", in considering their applications and making the Original Findings. (T10; T11; T12)
3. By letter to the Tribunal dated 7 December 2015, DZXP, KRQD and QJJS acknowledged that this information on their application forms was incorrect. That letter states:
   1. As the Respondent has pointed out, some of the Applicants misidentified themselves on the original application forms as not being members of a consolidated group when in fact they were. This was an administrative mistake, which it is submitted, can have no effect on the true facts. Under the "single entity" rule, their actions relevant to the Income Tax Assessment Acts are taken to be actions of the head entity and in fact their actions were under the direction and control of their respective head entities and for their benefit.
4. In that same letter, DZXP, KRQD and QJJS also confirmed that:
   • DZXP M is an "R&D entity" that is the head company of a MEC group, of which DZXP is a subsidiary member: at [8]-[10];
   • KRQD M is an "R&D entity" that is the head company of a consolidated group from 5 April 2011, of which KRQD is a subsidiary member: at [20]-[22]; and
   • QJJS M is an "R&D entity" that is the head company of a MEC group, of which QJJS is a subsidiary member: at [25]-[27].
5. As such, DZXP, KRQD and QJJS were not the correct applicants for the relevant applications for advance/overseas findings. According to Innovation Australia, the consequence of this is that any findings by the Tribunal, on review, will, pursuant to s 31(2) of the IR&D Act, have "no effect". The Tribunal agrees with this contention.
6. DZXP, KRQD and QJJS accept that s 31 of the IR&D Act should be read in accordance with its terms, so as to preclude registration on the part of a subsidiary of consolidated tax group or MEC entity under s 27A having any effect. In this regard, the Applicants' Submissions state:

6.1. We agree with the Respondent's argument identified at 4.1 above that, the text and structure of section 31 and sections 31A and 31B of the IR&D Act indicate that only one company in a tax consolidated group or MEC group should obtain the benefit of the R&D tax offsets, and that company should be the head company (provided the head company is also the R&D entity);

1. However, as contended by Innovation Australia, in seeking to avoid that consequence, DZXP, KRQD and QJJS contend that s 31 does not operate in a situation involving "administrative error", whereby subsidiary members of an MEC group are named in the applications instead of the head entities of the MEC group, in circumstances where:
   • (i) each of the head companies concerned:

(a) caused DZXP, KRQD and QJJS to make the initial applications, the applications for internal review and the applications to the Tribunal; and

(b) intended that the findings would affect their respective income tax positions; and

(ii) Innovation Australia did not pick up the error.

1. In this regard, the Applicants' Submissions state:

6.3. The Incorrect Names do not, by virtue of the operation of section 31 of the IR&D Act or any other section, render the Findings to have no effect. Rather, the consequence of the Incorrect Names is that the Findings apply only for the benefit of the Head Companies, being the entities entitled to the benefit of the R&D tax offsets in dispute.

...

6.11. The Applicants were misnamed in the applications for Advance/Overseas Findings as a result of an administrative error. The application forms for Advance/Overseas findings are not legislative instruments and are purely administrative in nature. Section 31 of the IR&D Act is intended to assist in the administration of the IR&D Act to be consistent with the single entity rule; it is not intended to render ineffective registrations under section 27A or findings under Part III of the IR&D Act purely because of an administrative error which misnames the R&D entity for the purposes of the registration and/or finding (as the case may be).

1. As submitted by Innovation Australia, the Tribunal finds that the first of the above matters, which is repeated, with some variation on a number of occasions in the Applicants' Submissions (at [9], [12]-[13], [31] and [61]), rises no higher than the level of assertion. As contended by Innovation Australia, there is nothing in the relevant advance/overseas findings application forms to suggest that they were submitted by DZXP, KRQD and QJJS, respectively, "on behalf of" any other party, nor is there any evidence before the Tribunal that would support an express or implied agency arrangement.
2. Additionally, as set out above (in paragraph 45), s 28B of the IR&D Act specifically provides that, an application for a finding under s 28A(1) can be made "on behalf of" an R&D entity, namely by an entity who is specified in the regulations and is acting with the R&D entity's written consent. However, that is not what occurred in this case.
3. Further, as submitted by Innovation Australia, the Tribunal finds that the second of the above matters seeks, wrongly, to hold Innovation Australia responsible for the alleged error. The Applicants' Submissions state:
   1. Accordingly, it is the Respondent's error in issuing the Findings in the name of the subsidiary members which results in the application of section 31, and denies the Head Companies the benefit of the R&D Tax Incentive Scheme.
4. Even if there were error on the part of Innovation Australia, the Tribunal considers (as submitted by Innovation Australia) that Innovation Australia would not be obliged to assist a party to nominate the correct applicant on an application form, nor is it required to reject an application from an incorrect entity.
5. More fundamentally, however, as asserted by Innovation Australia, DZXP, KRQD and QJJS do not advance any convincing basis, grounded in the text of s 31 or the surrounding legislative context, as to why s 31 does not operate, to render a finding in relation to a subsidiary entity ineffective, merely because the application made by the entity was the product of alleged administrative error. As argued by Innovation Australia, s 31 does not place any qualification on the operation of the section, by reference to administrative error or otherwise.
6. The Applicants' Submissions state (at [19]):

The basis for the Respondent's case that these proceedings before the Tribunal be dismissed relies entirely upon the fact that the relevant application forms misidentified the R&D entity. The Respondent, in turn, relies upon section 31 of the IR&D Act so that the Findings are of no effect. However, what the Respondent is asking the Tribunal to accept is the proposition that an administrative error made by the Applicants, not disputed by the Respondent for a period of more than 3 years and perpetuated by the Respondent in the Findings is grounds for the dismissal of these proceedings. The Respondent's proposition is neither contemplated by the words of section 31 nor consistent with the Explanatory Memorandum to the Tax Laws Amendment (Research and Development Bill) 2010 ("R&D Bill EM").

1. Contrary to the contention of DZXP, KRQD and QJJS at [19] of the Applicants' Submissions, Innovation Australia's dismissal application does not rely, "entirely" or otherwise, upon the fact that the forms were filled in "incorrectly". Its focus is, as it must be, upon the terms of s 31, in circumstances where the forms were filled in by DZXP, KRQD and QJJS, being subsidiary members of MEC groups.

1. DZXP, KRQD and QJJS seek to derive some support for their position from the "single entity rule" as set out in s 701-1 of Division 701 of Part 3-90 of the ITAA 1997. Broadly, under the "single entity rule", in s 701-1 of the ITAA 1997, where a group of corporate tax entities is a consolidated group (which is established by the head entity making an irrevocable choice to consolidate with all of its wholly-owned subsidiary entities), the group is treated as a single taxpayer for income tax purposes during the period of consolidation.
2. Relevantly, the Applicants' Submissions state:

1. One of the stated objectives of the income tax consolidation regime and the single entity rule as set out in the Explanatory Memorandum to the New Business Tax System (Consolidation) Bill (No.1) 2002 ("Consolidation Bill EM") is to "simplify the tax system and reduce ongoing compliance costs" for both the taxpayer and the Australian government, and "to promote economic efficiency by providing a taxation framework that allows Australian businesses to adopt organisational structures based more on commercial rather than tax considerations".
2. For the purposes of working out the liability to tax under the Australian income tax legislation, the single entity rule contained in Part 3-90 of the ITAA 1997 operates to treat a subsidiary member of a consolidated group to be part of the head company of the group, rather than separate entities during the period the subsidiary remains a member of the consolidated group. Therefore, the fundamental consequences of a choice made by a group of eligible wholly-owned entities to consolidate are that on entry into a consolidated group:

8.1. the head entity of a tax consolidated or MEC group bears liability for income tax on the taxable income of the entire group;

8.2. accordingly, the subsidiary entities lose their individual income tax identity for the duration they remain part of the tax consolidated or MEC group; and

8.3. the actions of the subsidiary members are treated as if they had been undertaken by the head company.

1. Each of the Head Companies of the relevant MEC group caused the applications for Advance/Overseas Findings to be made pursuant to sections 28A and 28C of the IR&D Act (along with the subsequent requests for internal review) and intended that the result of the applications would affect their taxation positions in accordance with the single entity rule.
2. The Applicants were all subsidiary members of MEC groups of which the respective head entities were the Head Companies. In those circumstances, by reason of section 31 of the IR&D Act (and the Consolidations regime in Part 3-90 of the ITAA 1997), the person who is affected by any findings made about activities conducted in the consolidated group is the head entity of the relevant consolidated group, not the subsidiary member.

1. The "single entity rule" was introduced in 2002 so as to allow head companies and wholly- owned entities to elect to be taxed as a single entity. Sections 28A, 28C and 31 were inserted into the IR&D Act in 2011. The passages in the EM, set out in paragraphs 57 to 60 above, indicate that the legislature was cognisant of the relationship between these provisions and the single entity provisions of the ITAA 1997. In those circumstances, express provision could have been made by the legislature for s 31 of the IR&D Act to operate in a manner that accommodated situations such as DZXP, KRQD and QJJS assert occurred in the present case, but, tellingly, it was not.
2. Further, DZXP, KRQD and QJJS seek to rely on the decision of the majority of the High Court of Australia in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (Project Blue Sky) in support of their position. Specifically, the Applicants' Submissions state:
   1. The correct interpretive approach in circumstances where there appears to be a conflict between legislative provisions is considered in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 at [70]:

"A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme."

1. This passage emphasises the importance of the context, purpose and policy of a provision and its consistency and fairness as guides to its meaning (refer Channel Pastoral Holdings Pty Ltd v Commissioner of Taxation [2015] FCAFC 57 at [5]).
2. Consequently, section 31 of the IR&D Act should be read to in a manner which achieves harmony between its operation and the objectives of the Consolidations regime.
3. As submitted by Innovation Australia, that s 31 of the IR&D Act was not drafted in that manner, 9 years after the "single entity rule" was introduced in Part 3-90 of the ITAA 1997, so as to permit any qualifications on its operation, represents a legislative choice that no exceptions be made. In so far as the DZXP, KRQD and QJJS rely on Project Blue Sky, the Tribunal considers that its construction of s 31 of the IR&D Act, as set out above, is consistent with the text of the provision, read in context: refer to paragraphs 44 to 56 above.
4. The Tribunal considers its construction of Division 6 of Part III of the IR&D Act is entirely consistent with the consolidation regime in Part 3-90 of the ITAA 1997. Indeed, the provisions operate in tandem - they dovetail together neatly. Section 31 of the IR&D Act reflects or, put differently, is married to the "single entity" rule in s 701-1 of the ITAA 1997. Section 31A of the IR&D Act reflects, or is married to, the "entry history rule" in s 701-5 of the ITAA 1997 and s 31B of the IR&D Act reflects, or is married to, the "exit history rule" in s 701-40 of the ITAA 1997. More specifically, s 31 of the IR&D Act reflects the "single entity" rule in the ITAA 1997 and seeks to ensure that the right entity, being the "head entity" of a consolidated or MEC group, makes the application for findings. That is, there is no value in an R&D entity which is a subsidiary member of a consolidated or MEC group seeking registration or findings. What s 31 of the IR&D Act is effectively saying is that if a subsidiary member of a consolidated or MEC group applies to Innovation Australia for findings, the findings will have "no effect" because the relevant entity under the "single entity" rule is the "head entity" of the consolidated or MEC group and it is the "head entity" that should make the application.
5. DZXP, KRQD and QJJS submit that Innovation Australia's construction of s 31 of the IR&D Act would have an unintended effect, by precluding a head entity from accessing tax benefits to which it would otherwise be entitled. Relevantly, the Applicants' Submissions state:

6.3. The Incorrect Names do not, by virtue of the operation of section 31 of the IR&D Act or any other section, render the Findings to have no effect. Rather, the consequence of the Incorrect Names is that the Findings apply only for the benefit of the Head Companies, being the entities entitled to the benefit of the R&D tax offsets in dispute.

...

6.6. The overriding objective of the statutory regime embodied in the IR&D Act as set out in section 3 is, "to promote the development, and improve the efficiency and international competitiveness, of Australian industry by encouraging R&D activities and innovation". The Head Companies are entitled to and seek the benefit of this statutory regime.

...

1. Each of the Head Companies have at all relevant times been R&D entities for the purposes of the IR&D Act and the ITAA 1997, an accordingly were entitled to apply for Advance/Overseas Findings under sections 28A and 28C of the IR&D Act at the time the original applications were made.
2. However, as contended by Innovation Australia, DZXP, KRQD and QJJS have not clearly articulated what function s 31 of the IR&D Act would serve if it did not have that effect.

1. To access the R&D tax incentive for the claimed overseas R&D activities, under s 355-205 and s 355-210 of the ITAA 1997, DZXP, KRQD and QJJS must be registered in relation to R&D activities under s 27A of the IR&D Act and the activities must be the subject of a finding under s 28C of the IR&D Act.
2. Section 355-205 of the ITAA 1997 provides:

355-205 When notional deductions for R&D expenditure arise

(1) An *R&D entity can deduct for an income year (the present year) expenditure it incurs during that year to the extent that the expenditure:

(a) is incurred on one or more *R&D activities:

(i) for which the R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for an income year; and

(ii) that are activities to which section 355-210 (conditions for R&D activities) applies; and

(b) if the expenditure is incurred to the R&D entity's *associate - is paid to that associate during the present year.

(emphasis added)

1. As stated above (in paragraph 9), the "head entity" of the DZXP MEC group has registered under s 27A of the IR&D Act in respect of the income year ended 30 June 2013, but it has not registered under s 27A in respect of the income years ended 30 June 2014 and 30 June 2015. It has, however, lodged applications for late registration, which Innovation Australia will consider under the IR&D Act and the IR&D Principles_._ However, at this stage an essential requirement under s 355- 205 of the ITAA 1997 has not been met for the head company of the DZXP MEC group of which DZXP is a subsidiary.
2. As stated above (in paragraph 10), the "head entities" of the KRQD MEC group and the QJJS MEC group are registered under s 27A of the IR&D Act for the income years ended 30 June 2013, 30 June 2014 and 30 June 2015.
3. As part of the statutory requirements in s 355-205 of the ITAA 1997, s 355-210 must be satisfied. Section 355-210 of the ITAA 1997 relevantly provides:
   • 355-210 Conditions for R&D activities

(1) An *R&D activity covered by one or more of the following paragraphs is an activity to which this section applies:

(a) ...

...

(d) the R&D activity is:

(i) conducted for the R&D entity solely outside Australia and the external Territories; and

(ii) covered by a finding in force under paragraph 28C(1)(a) of the Industry Research and Development Act 1986;

(e) the R&D activity consists of several parts, with:

(i) some parts being conducted for the R&D entity solely within Australia or an external Territory; and

(ii) the other parts being conducted for the R&D entity outside Australia and the external Territories while covered by a finding in force under paragraph 28C(1)(a) of the Industry Research and Development Act 1986.

1. For the above reasons, the findings that have been made by Innovation Australia in respect of DZXP, KRQD and QJJS have "no effect" under s 31 of the IR&D Act. Accordingly, DZXP, KRQD and QJJS cannot satisfy the second statutory requirement in s 355-205(1)(a)(ii) of the ITAA 1997.
2. Nor can any of the head companies of the DZXP, KRQD and QJJS MEC groups. As submitted by Innovation Australia, the difficulty for them is, under s 355-205(1)(a) and s 355-210(1)(d) and (e) of the ITAA 1997, an R&D entity has to be both registered and have a finding in force under s 28C of the IR&D Act in order to be eligible for a tax offset for overseas activities. As submitted by Innovation Australia, a finding cannot now be made under s 28C of the IR&D Act in relation to the past income years on the application of the head companies of the DZXP, KRQD and QJJS MEC groups.
3. Further, as contended by Innovation Australia, by reason of the operation of s 31 of the IR&D Act, the nature of the findings in s 28C of the IR&D Act as "advance" findings, and the operation of s 355-205 of the ITAA 1997, a review of the Deemed Decisions by the Tribunal cannot result in a situation where of the DZXP, KRQD and QJJS, or their head companies, can obtain the benefit of the relevant R&D Tax incentive. Accordingly, the applications are misconceived or, alternatively, have no reasonable prospect of success. Whilst the Tribunal is cognisant of the fact that the s 42B dismissal power is one which should be exercised cautiously and sparingly (refer to paragraph 33 above), it considers it appropriate that the power be exercised in this case.
4. Section 2A of the AAT Act provides:

2A Tribunal's objective

In carrying out its functions, the Tribunal must pursue the objective of providing a mechanism of review that:

...

(b) is fair, just, economical, informal and quick; ...

1. The dismissal of these applications is, in the Tribunals' view, consistent with the Tribunal's statutory objective in s 2A of the AAT Act, as set out above. To permit DZXP, KRQD and QJJS to direct further efforts towards gathering and presenting additional material for a hearing, and to require Innovation Australia and, indeed, the Tribunal to allocate additional resources to these proceedings, would be contrary to the Tribunal's statutory objective: refer to the case law discussed in paragraphs 35 to 43 above.

1. The Applicants' Submissions state the following in relation to s 28C of the IR&D Act:
   1. Subsection 28C(2) provides that a finding under section 28C comes into effect in the year in which the application is made. Accordingly, an application for a finding made after the end of a year of income will not have any effect in respect of an income year prior to the year in which the application is made. There is no express power in the IR&D Act which enables an applicant to obtain an extension of time to make an application for a finding under section 28C of the IR&D Act. Accordingly, each of the Head Companies are now prevented from applying for fresh findings under section 28C of the IR&D Act in respect of each of the years in question (i.e. the 2011-12, 2012-13 and 2013-14 years).
   2. However, the IR&D Act is silent in relation to the ability to amend an application for a finding under section 28C which has been submitted in a particular income year. As stated in paragraph 5.169 of the R&D Bill EM, forms approved by the Board in respect of applications for findings are administrative only. Importantly, there is no express provision which prevents an application for a finding being amended by an applicant or the Respondent, or by reason of section 43(1) of the AAT Act, the Tribunal itself.
   3. It appears that if one existed, an express power to amend an application for a finding under section 28C would be found in Subdivision E of Division 3 in Part III of the IR&D Act, which sets out matters relevant to findings made under Division 3, which includes section 28A and section 28C. It is likely that an express power to vary or amend an application was considered unnecessary given that any such amendment would be administrative in nature. The Board's power to correct administrative errors in application forms would fall within its general powers contained in section 8 of the IR&D Act.
   4. Each of the Applicants have applied for a finding in the approved form in respect of the income years in which the Applicants seek them to have effect (e.g. the 2011-12 income year). Administrative errors as to the names of the R&D entity (the relevant applicant) were made when the forms were completed. In this regard, for the findings to have effect, each of the application forms should have identified the Head Companies as an applicant instead of the relevant subsidiary member applicant.
   5. Accordingly, the Applicants and the Head Companies now seek that the applications for findings under section 28C lodged by the Applicants on 20 December 2012 be amended to include the Head Companies as applicants for findings under section 28C of the IR&D Act.
2. As submitted by Innovation Australia, DZXP, KRQD and QJJS's invocation of s 28C of the IR&D Act to entitle the head entities to findings that apply to income years that have already passed, involves a construction of the provision that is contrary to its terms, and contrary to the otherwise detailed regime in the IR&D Act pursuant to which applications may be amended or varied.
3. The Applicants' Submissions provide the following in relation s 28G if the IR&D Act:
   1. Subsection 28G(2) of the IR&D Act provides for joint applications for identical advance findings. An application for joint findings under subsection 28G(2) is clearly appropriate in circumstances where the head entity of a consolidated or MEC group seeks a finding in respect of activities undertaken by a subsidiary member of the group. If, as requested, the applications for Advance/Overseas Findings the subject of these proceedings are amended to add the Head Companies as applicants (in addition to the original subsidiary member applicants), the applications should be treated as separate applications for findings by the Head Companies.
4. Further, as contended by Innovation Australia, the Tribunal finds that s 28G of the IR&D Act does not assist DZXP, KRQD and QJJS. The provision does no more than prescribe how applications are to be made, by one or more entities, and how those applications will be treated. As argued by Innovation Australia, it cannot be relied upon by the Tribunal as conferring a power to characterise an application that was made by a subsidiary entity as one made by the head entity, in circumstances where the head entity did not make the application.

1. Section 8 of the IR&D Act, titled "Powers of the Board", provides:

The Board has power to do all things necessary or convenient to be done for or in connection with the performance of its functions.

1. The Applicants' Submissions state the following in relation to the application of s 8 of the IR&D Act in this case:

1. By the operation of section 8 of the IR&D Act, the Respondent may, if it determines it is appropriate, make an administrative amendment to vary the name of an applicant on an application for a finding pursuant to section 28A and/or 28C of the Act.
2. In determining whether it is appropriate to exercise the discretion, the Respondent's ability to perform its functions, as prescribed by statute, is a relevant consideration.
3. Part III of the IR&D Act is entitled "Functions relating to the R&D tax offset". Section 26 sets out the objects of Part III, which include:

"to provide integrity for the working out of tax offsets under Division 355 . . . of the Income Tax Assessment Act 1997"; and

"to increase certainty through findings about matters relevant to the working out of those tax offsets."

1. It is intended that the Respondent enhances the integrity of the R&D tax offset regime by managing a process of registration for activities (refer paragraph 5.3 of the R&D Bill EM) and by making findings about R&D activities conducted outside Australia in order to enable eligible entities to access an R&D tax offset (refer paragraph 5.4 of the R&D Bill EM).
2. By operation of section 8 of the Act, the Respondent has the "power to do all things necessary or convenient to be done for or in connection with the performance of its functions".
3. The words contained in section 8 should be interpreted in a manner that would best achieve the objects of the IR&D Act (whether or not those objects are expressly stated in the IR&D Act) (refer section 15AA of the Interpretation Act).
4. The power conferred by section 8 is a general power which facilitates the proper and efficient functioning of the Board of Innovation in carrying out the functions conferred upon it by the IR&D Act.
5. Due to its general terms, the scope of the power conferred on the Respondent by section 8 is capable of including the power to correct errors contained in an application for findings under section 28A and 28C of the IR&D Act, if those corrections are necessary or convenient to be done for the effective administration of the Board of Innovation's functions.
6. Due to the operation of section 31, if an application is made pursuant to sections 28A and 28C of the IR&D Act, and the application is in the name of a subsidiary member, rather than the head entity, of a consolidated or MEC group, any finding made by the Respondent on that application is of no effect.
7. Consequently, if the subsidiary member of the consolidated or MEC group were not to be replaced by the head entity on the application form, the Board of Innovation could not perform its functions under section 26 of the IR&D Act and as contemplated at paragraphs 5.3 and 5.4 of the R&D Bill EM.
8. A power conferred on the Respondent to vary the name of the applicant on an application for a finding pursuant to sections 28A and 28C is comparable to the Respondent's powers to vary registrations made under section 27A of the IR&D Act.
9. The Respondent may vary an R&D entity's registration made under section 27A at any time the entity applies to make minor amendments to correct information provided in the application for registration (refer principles 5.2 and 5.3 of the Industry Research and Development Decision-making Principles 2011). The Applicants refer to paragraph 38 of the Respondent's written submissions which acknowledges that the Respondent is currently considering such an application by [DZXP M] to register as an R&D entity for the income periods 2013/14 and 2014/15. To date, the Respondent has not provided any indication to either [DZXP M] or ... DZXP that those applications will not be varied in favour of [DZXP M] and the Tribunal should proceed on the basis that the correct head entity will be registered accordingly for those income periods.
10. The generality of the power conferred on the Respondent by section 8 should not be read so broadly that it would be inconsistent with other specific provisions of the IR&D Act.

1. A construction of the section 8 power which empowers the Respondent, on the request of an applicant, to amend the name of the applicant on an application for a finding under sections 28A and 28C from a subsidiary member of a consolidated group to the head entity of that group, is consistent with the purpose of the provisions contained in Division 6, including section 31 of the IR&D Act.
2. There is no evident repugnancy between this construction of the section 8 power and the specific provision contained in section 31 of the IR&D Act.
3. In so far as DZXP, KRQD and QJJS rely on s 8 of the IR&D Act for the proposition that Innovation Australia is able to do all things "necessary and convenient" in the performance of its powers and functions, the Tribunal notes the following:
   • an ancillary provision, like s 8 of the IR&D Act, cannot have the consequence of overriding the express words in s 31 of the IR&D Act: Victims Compensation Fund v Brown [2003] HCA 54; (2003) 77 ALJR 1797;
   • Innovation Australia (i.e. the Board) has the functions and powers set out in the IR&D Act and the "necessary and convenient" power in s 8 operates to supplement those powers to ensure that the Board can operate effectively. However, as submitted by Innovation Australia, s 8 is not a vehicle to introduce new powers or functions which are at odds with the express statutory scheme; and
   • s 31 of the IR&D Act does not, as contended by Innovation Australia, involve the exercise of a power. Rather, it operates as a matter of law, and applies to a finding made "on application by an R&D entity...".
4. DZXP, KRQD and QJJS contend that the Tribunal, standing in the shoes of Innovation Australia, has the power, pursuant to s 8 of the IR&D Act, to vary the findings of Innovation Australia so that the findings relate to another entity, namely the head entities of the MEC groups of which DZXP, KRQD and QJJS are subsidiary members. For the reasons below, the Tribunal does not accept this submission.
5. It is fundamental to the Tribunal's jurisdiction that it must be conferred by an enactment, in this case s 30E of the IR&D Act does that. Despite the broad power of the Tribunal to stand in the shoes of the decision-maker (here, Innovation Australia), it must be borne in mind that the power is exercisable only in relation to the decision under review (i.e. the "reviewable decision"). Section 43(1) of the AAT Act states:

for the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision...

(emphasis added)

However, the Tribunal does not substitute for the decision-maker generally, nor does it have a general review or decision-making power. As President Brennan J said in Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167 at [175]:

The Tribunal is not a primary administrator. It is not the original repository of powers and discretions under an enactment.

1. Consequently, if for some reason (as is the case here), an issue before the Tribunal has not been the subject of a decision of the primary decision-maker, the Tribunal cannot itself assume to make a decision on the matter on the basis that the decision-maker could have or should have made such a decision: Re Hare and Commissioner for Superannuation (1979) 2 ALD 233.
2. Section 30 of the IR&D Act provides:
   • An entity affected by a reviewable decision may ask the Board to conduct an internal review of that decision.
   • The entity, or another entity affected by the resulting internal review decision, may ask the Administrative Appeals Tribunal to review the internal review decision.

1. Section 30A of the IR&D Act sets out which decisions are "reviewable decisions". Relevantly, a decision of the Board under s 8 of the IR&D Act is not a "reviewable decision" under s 30A of the IR&D Act. The "reviewable decisions" in this case are the Deemed Decisions: refer to paragraph 16 above. For the above reasons, the Tribunal does not have the power to vary the Deemed Decisions to have them apply to different entities. Relevantly, to the head entities of the DZXP, KRQD and QJJS MEC groups.
2. At the hearing of this dismissal application, counsel for DZXP, KRQD and QJJS argued that the Tribunal has an inherent power to correct what is an error or "misdescription" on the face of a document. Specifically, the Tribunal has an inherent power to replace the names of DZXP, KRQD and QJJS with the names of their respective head entities on their applications for advance/overseas findings to Innovation Australia. Counsel for DZXP, KRQD and QJJS submitted that this is particularly so, having regard to Innovation Australia's expectation that such applications will be made by the head entity of a MEC group (refer to paragraph 54 above) and the description on the application forms of the activities being undertaken by DZXP, KRQD and QJJS. In support of this submission, counsel for DZXP, KRQD and QJJS relied on the decision of the High Court of Australia in Bridge Shipping Pty Limited v Grand Shipping SA and Another [1991] HCA 45; (1991) 173 CLR 231 (Bridge Shipping).
3. Bridge Shipping was a case concerning the proper construction of Rule 36.01 of the Rules of the Supreme Court of Victoria (Rules). Rule 36.01 of the Rules relevantly provides:
   • (1) For the purpose of determining the real question in controversy between the parties to any proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings, the Court may at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.

(4) A mistake in the name of a party may be corrected under paragraph (1), whether or not the effect is to substitute another person as a party.

1. As submitted by counsel for Innovation Australia, in Bridge Shipping the High Court was specifically concerned with the proper construction of rule 36.01 of the Rules rather than considering some inherent power of the court to make a correction. This is clear from the following passage of the reasons for judgment of McHugh J at [627]:

Rule 36.01(4) is a remedial rule and should be given a beneficial interpretation. It is proper to give it the widest interpretation which its language will permit...

To give the rule meaning for which Bridge contends does not mean that a person can sue any person and then at some later time substitute another person for the original defendant. The rule imposes three limitations on a person's right to amend...

1. As such, Bridge Shipping is of little assistance to the task that is before the Tribunal in this case and regarding the question of whether, in reviewing decisions under s 43 of the AAT Act, the Tribunal can make any corrections to the names of the R&D entities who applied to Innovation Australia for advance/overseas findings. The powers that the Tribunal may exercise are tied by the terms of s 43(1) of the AAT Act. In this case, the Tribunal is reviewing very particular decisions (i.e. the Deemed Decisions) which have been made in relation to particular entities (i.e. DZXP, KRQD and QJJS). Under s 43(1) of the AAT Act, it can do one of three things - affirm the Deemed Decisions, vary the Deemed Decisions or set-aside and substitute or remit the Deemed Decisions. It would not constitute a "variation" of a decision, as traditionally understood, to change the name of a party or to change the name of the R&D entity, such that the benefit goes to an entirely different entity to the one that applied for the advance/overseas findings and the one that applied for to the Tribunal for review. The notion of correcting the applications which resulted in the Deemed Decisions being made is not within the Tribunal's statutory power. The Tribunal has no inherent power to correct misdescriptions in the way that a court may.
2. Additionally, counsel for DZXP, KRQD and QJJS seek to gain support for their positions from s 25C of the Acts Interpretation Act 1901 (AIA), which provides:

s 25C Compliance with forms

Where an Act prescribes a form, then strict compliance with the form is not required and substantial compliance is sufficient.

1. According to counsel for DZXP, KRQD and QJJS, once Innovation Australia became aware that DZXP, KRQD and QJJS were subsidiary members of MEC groups and that their applications for advance/overseas findings were being made in respect of activities being conducted within those groups, s 25C of the AIA would assist in the conclusion that that there was substantial compliance with the approved form. Alternatively, counsel for DZXP, KRQD and QJJS submitted that substantial compliance applies a fortiori.
2. The Tribunal does not accept either of these submissions. Section 25C of the AIA deals specifically with "prescribed" forms. Here, an application form for advance/overseas findings is not a "prescribed" form it is an "approved" form. That is, the form is approved by the Minister, it is not prescribed by regulation. Further, there is nothing before the Tribunal to support the contention that substantial compliance applies a fortiori in this case.

1. For the above reasons, the Tribunal dismisses applications 2015/1257, 2015/1258 and 2015/1259 pursuant to s 42B of the AAT Act.

I certify that the preceding 121 (one hundred and twenty one) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh

.....[Sgd]...................................................................

[1] Section 4 of the IR&D Act provides that the terms "consolidated group" and "MEC group" have the same meaning in the IR&D Act as they have in the ITAA 1997. The "Dictionary definitions" in s 995-1 of the ITAA 1997 provide that "consolidated group" has the same meaning given by s 703-5 of the ITAA 1997 and that "MEC group" has the meaning given by s 719-5 of the ITAA 1997. It is common ground that, at all relevant times, DZXP, KRQD and QJJS were wholly-owned subsidiary members of MEC groups.