Eligible Activities

Identification of Supporting R&D Activities

Supporting R&D activities are activities that are directly related to one or more core R&D activities.

By way of a summary, core R&D activities are experimental activities that follow a systematic progression of work and have an outcome that cannot be known or determined in advance.  Core R&D activities are conducted for the purpose of generating new knowledge. For more detail see the section on core R&D activities and AusIndustry’s guidance material.

Question 1

Have the core R&D activities already been identified?

Question 2

Supporting R&D activities must be directly related to a core R&D activity.  This means that they must have a direct, close and relatively immediate relationship with a core R&D activity. 

Activities that make a direct contribution to the conduct, observation or evaluation of an experiment are likely to meet this requirement.

Is the activity directly related to a core R&D activity?

Question 3

Does the activity produce, or is directly related to producing, goods or services or does it fall into any of the following exclusion categories?

  1. market research, market testing or market development, or sales promotion (including consumer surveys);
  2. prospecting, exploring or drilling for minerals or petroleum for the purposes of one or more of the following:
    1. (i) discovering deposits;
    2. (ii) determining more precisely the location of deposits;
    3. (iii) determining the size or quality of deposits;
  3. management studies or efficiency surveys;
  4. research in social sciences, arts or humanities;
  5. commercial, legal and administrative aspects of patenting, licensing or other activities;
  6. 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;
  7. 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 publically available information;
  8. 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;
    (ii) an entity connected with the developer;
    (iii) an affiliate of the developer, or an entity of which the developer is an affiliate.

Question 4

Activities that are on the core R&D activities exclusion list or activities that produce, or are directly related to producing, goods or services must also be conducted for the dominant purpose of supporting a core R&D activity.

This means that the ruling, prevailing or most influential purpose of conducting the activity must be to support the core R&D activity. This purpose must outweigh any other commercial considerations for undertaking the activity.

Is the activity undertaken for the dominant purpose of supporting a core R&D activity?

Question 5

Was the activity conducted in Australia or the external Territories?

 

Answer

On the basis of the answers you have given, the activity appears likely to be a supporting R&D activity

These questions are intended to provide useful information for companies considering accessing the R&D Tax Incentive. However they are not exhaustive and they, and any outcomes arising from answering them, are not legal or financial advice. It is your responsibility, with the assistance of any advice you wish to seek, to satisfy yourself about the eligibility of your activities for the R&D Tax Incentive. The Commonwealth disclaims all liability for any loss or damage arising from you or anyone else relying on these questions, any statement contained in them, or any outcome arising from them.

You must retain records that describe the activities you have conducted in sufficient detail to demonstrate that they meet the definition of core R&D activities. For more information, see AusIndustry’s record keeping guide Compliance Readiness: Importance of record keeping and R&D Tax Incentive: A Guide to Interpretation, which are available on business.gov.au.

 
 

Answer

On the basis of the answers you have given, the activity appears likely to be a supporting R&D activity

These questions are intended to provide useful information for companies considering accessing the R&D Tax Incentive. However they are not exhaustive and they, and any outcomes arising from answering them, are not legal or financial advice. It is your responsibility, with the assistance of any advice you wish to seek, to satisfy yourself about the eligibility of your activities for the R&D Tax Incentive. The Commonwealth disclaims all liability for any loss or damage arising from you or anyone else relying on these questions, any statement contained in them, or any outcome arising from them.

You must retain records that describe the activities you have conducted in sufficient detail to demonstrate that they meet the definition of core R&D activities. For more information, see AusIndustry’s record keeping guide Compliance Readiness: Importance of record keeping and R&D Tax Incentive: A Guide to Interpretation, which are available on business.gov.au.

Alert / NoteYou can only claim expenditure on R&D activities that are carried out overseas if the activities are registered with AusIndustry and are covered by an Overseas Finding.

An Overseas Finding is a decision made by Innovation Australia regarding whether activities performed outside Australia and the external Territories are eligible under the R&D Tax Incentive. 
Overseas work must satisfy four requirements in order to be eligible as an overseas activity:

  1. the overseas activity must be an eligible R&D activity
  2. one or more core R&D activities conducted in Australia must be unable to be completed without doing the overseas activity.
  3. the overseas activity must be unable to be conducted in Australia (for specified reasons); and
  4. the total actual and reasonably anticipated expenditure in all income years on the overseas activities is less than the total actual and reasonably anticipated expenditure in all income years on the related Australian R&D activities.

An Overseas Finding will only cover activities conducted during or after the income year in which AusIndustry receives the application for the Overseas Finding.  You need to complete and lodge your application form before the end of the relevant income year because Innovation Australia does not have any discretion to backdate late applications.

You can apply for an Overseas Finding by completing the application form on business.gov.au

 
Non Core 

Answer

On the basis of the answers you have given, the activity appears unlikely to be a supporting R&D activity.

These questions are intended to provide useful information for companies considering accessing the R&D Tax Incentive. However they are not exhaustive and they, and any outcomes arising from answering them, are not legal or financial advice. It is your responsibility, with the assistance of any advice you wish to seek, to satisfy yourself about the eligibility of your activities for the R&D Tax Incentive. The Commonwealth disclaims all liability for any loss or damage arising from you or anyone else relying on these questions, any statement contained in them, or any outcome arising from them.

 
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Answer

Identify the project's core R&D activities before supporting R&D activities.

Identification of Core R&D Activities