Software R&D Eligibility Checklist
The Core R&D activity test in s355-25 ITAA 1997 plus the statutory exclusions and entity rules collapse to seven practical gates for software work. Pass all seven, you have a Core activity. Fail any one, you don't.
New knowledge sought
Is the outcome new knowledge - not just a new product, feature or revenue line? Re-implementing a known technique to ship a feature is not new knowledge. Discovering whether a known technique works at your scale, on your data, or against your constraints often is.
Ask your team"What did we learn that wasn't already documented or commercially available?"
Outcome unknown in advance
A competent professional in the field could not have known or determined the outcome by applying current knowledge. If someone could have answered the question by reading the docs or a textbook, it's not Core.
Ask your team"Before we started, what did we genuinely not know how to predict?"
Systematic progression of work
There is a documented progression: hypothesis → experiment → observation → evaluation → conclusion. Not iteration as a vibe - iteration with stated, falsifiable hypotheses.
Ask your team"What was our hypothesis, and what would have made us reject it?"
Experimental activities
The work involved experiments - comparisons against a baseline, A/B against a control, ablations, benchmarks. A development is not an experiment.
Ask your team"What did we compare against, and how did we measure?"
Conducted for the purpose of generating new knowledge
The purpose at the time of the activity was knowledge-generation, not deployment of a known solution. Purpose is judged contemporaneously - not in hindsight after launch.
Ask your team"If we'd known the answer up front, would we still have done the work?"
Not on the exclusion list
The activity isn't excluded by law - routine bug-fixing, software for internal admin, compliance work, market research, or maintenance of existing systems are all out. Read s 355-25(2) ITAA 1997.
Ask your team"Would we have done this work even without an R&D angle, just to keep the lights on?"
R&D entity in Australia
You are a body corporate, incorporated in Australia (or a foreign corporation tax-resident here). Activities done overseas need a separate Overseas Finding application, lodged before year-end.
Ask your team"Where was the work done, and where is the entity incorporated?"
For Supporting activities
Supporting activities don't need to pass gates 1-4 themselves. They need to be directly related to a Core activity, and undertaken for the dominant purpose of supporting it. Production-style activities (build-and-deploy, customer onboarding, data labelling at scale) face a stricter test.
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