Commonwealth Bank has ended its long-running dispute with the Australian Taxation Office over a rejected application for a multimillion-dollar research and development rebate.
CBA said on Monday it had agreed to withdraw from all current proceedings with the ATO and Innovation and Science Australia (ISA) before the Administrative Appeals Tribunal.
The tribunal had been set to hear the matter this week.
CBA had applied for an R&D incentive – designed to support innovative projects – in relation to what it called its ‘core banking modernisation project’.
The ATO said, while it could not comment specifically due to confidentiality laws, the agreement showed digital transformation and software development did not automatically qualify for the tax incentive.
‘Activities must meet strict legal criteria to qualify for the R&D tax incentive,’ ATO deputy commissioner Rebecca Saint said.
‘Just because a project is large, expensive or risky does not mean it necessarily qualifies as R&D for the purposes of the tax incentive.’
The ATO said its guidance to companies interested in the incentive includes flagging areas of concern and common mistakes in applications.
‘Companies and their advisors should consider how this guidance applies to their circumstances to be confident that their claims are correct,’ the ATO said.
CBA’s claims for the 2012 and 2013 financial years were understood to be worth tens of millions of dollars, but the bank said Monday’s agreement would not have a material impact on its financial results.
CBA said all other prior year matters had also been finalised.
CBA chief executive officer Matt Comyn has spent his first year as chief executive dealing with the fallout of his predecessors’ tenures, overseeing divestment plans, customer remediation and the bank’s response to the recommendations of the royal commission.
The lender last week said it had already spent or set aside $1.46 billion to tackle remediation-related issues, $1.215 billion of which was for the wealth management unit that charged fees for no advice and mis-sold insurance.