AusIndustry requires contemporaneous records that demonstrate a hypothesis-driven, experimental process with technical uncertainty. Businesses must document core and supporting R&D activities in real time, including test logs, design iterations, planning notes, and outcome evaluations. Evidence like Git commits, lab notebooks, or QA annotations is acceptable.
Documenting R&D activities is not paperwork; it’s a compliance strategy. Under the AusIndustry framework, your ability to secure the R&D Tax Incentive depends on proving that your projects meet eligibility rules with structured, timely evidence.
Many businesses miss out on funding or trigger audits because their records lack the detail, consistency, or traceability that AusIndustry requires. Describing your experiments after the fact, or without showing uncertainty and iteration, leaves you vulnerable, even if your work meets the criteria in practice.
Learn what AusIndustry expects from your R&D documentation, when to create it, how to structure it, and what evidence supports a claim. It includes industry-specific examples, proven formats, and documentation timelines that match each phase of an R&D project.
If you’re preparing a claim or want to avoid future issues, this is your roadmap to building audit-proof records from start to finish.
Why Documentation Matters for the R&D Tax Incentive
Keeping accurate R&D records isn’t about ticking a box. AusIndustry uses documentation to decide whether your activities genuinely qualify under the R&D Tax Incentive. Without proper evidence, even a valid claim can be rejected or audited. That’s why we treat documentation as part of your R&D strategy, not an afterthought.
Businesses applying for the R&D Tax Incentive need to demonstrate that their activities meet strict eligibility requirements. But proving eligibility isn’t only about describing what you did, it’s about showing how you approached a genuine technical or scientific uncertainty using a systematic, experimental process.
Poor or retrospective documentation is one of the most common reasons claims are reduced or denied. We’ve seen clients face unnecessary ATO scrutiny simply because their records didn’t align with what AusIndustry expects, despite doing legitimate R&D work.
By setting up a structured documentation process early, you reduce risk, strengthen your position during reviews, and give your business the best chance of securing the incentive you’re entitled to.
What AusIndustry Looks for in Your R&D Records
AusIndustry doesn’t just want to see what your business did; they want to understand how your work qualifies as R&D under the legislative definition. That means your records need to demonstrate experimentation, uncertainty, and a structured approach. Vague summaries or end-of-year notes won’t hold up under review.
To support a successful claim, your records must show two key types of activities:
- Core R&D Activities: These are experimental activities undertaken to resolve a technical or scientific uncertainty. The outcome should not be able to be determined in advance using existing knowledge.
- Supporting R&D Activities: These are tasks that directly contribute to your core R&D work. However, they must serve the dominant purpose of enabling those experiments, not general business operations.
To demonstrate this distinction clearly, we guide clients to create a project-level breakdown that includes:
- A documented knowledge gap explains what you didn’t know and why it couldn’t be solved using existing methods.
- A clearly defined hypothesis describes the assumptions you tested.
- A record of your systematic progression of work shows how the hypothesis was tested through observation, evaluation, and iteration.
During a claim review, AusIndustry looks for contemporaneous documentation, records created at or around the time of the activity. This can include test plans, technical diagrams, experiment logs, version histories, and even internal correspondence that reflects critical thinking.
When you work with us, we ensure your records align with both AusIndustry’s expectations and the scientific method requirements outlined in the program guidelines. This is also where our experience with complex tax advisory adds value; structuring the right approach from day one prevents backtracking later.
Real Examples of Audit-Proof R&D Documentation
Knowing what qualifies as “acceptable documentation” under the R&D Tax Incentive isn’t always clear. AusIndustry doesn’t provide a checklist; they expect records to prove, not explain, that your work followed a scientific or technical process. These examples show how documentation can look across different industries and R&D styles.
We work with a range of businesses, from SaaS and engineering firms to wellness innovators, each requiring tailored documentation systems. Below are practical examples of evidence that typically hold up during an audit:
Software Development
- Git commits showing technical changes tied to R&D goals
- JIRA task histories with timestamps and failure logs
- A/B testing logs showing iterations based on uncertainty
- UX experimentation reports for new algorithms or frameworks
Advanced Manufacturing
- Material test results with controlled variables
- Engineering diagrams comparing experimental designs
- Failure reports from prototype iterations
- Supplier correspondence showing collaborative development
Health & Medical Innovation
- Lab notebooks documenting clinical or biological testing
- Controlled test environments and recorded variables
- Regulatory compliance records (e.g., TGA submissions tied to R&D)
- Outcome summaries referencing the knowledge gap
Marketing and Process Innovation
While harder to claim, we’ve supported service-based businesses by documenting:
- Experimental marketing strategies (hypothesis → data → adjustment)
- New software process implementation with structured trials
- Statistical performance comparisons before and after experimentation
When we implement Virtual CFO services, one area we focus on is aligning financial data with R&D records, for example, matching time logs or supplier invoices with the corresponding technical experiments. This creates a full audit trail that doesn’t rely on memory or assumptions.
If your current system doesn’t include this level of traceability, we can help develop one that does, with minimal disruption to how your team already works.
How to Structure and Store R&D Documentation
It’s not enough to keep good records; they need to be structured, retrievable, and tied to each R&D project. When AusIndustry requests evidence, they expect to see organised, clearly dated records that trace the progression of your experiments from start to finish.
We recommend clients build a dedicated R&D folder structure, digital or cloud-based, linked to each financial year and project. Each folder should include subfolders for planning, testing, results, and costs. Tools like Google Drive, SharePoint, or Confluence can be configured to log timestamps, version history, and user access, which all strengthen your audit position.
At a minimum, your R&D documentation system should include:
- A project overview that explains the knowledge gap and intent
- A series of hypothesis test documents with results or iterations
- Clear folders for supporting activity records (including contractor or supplier contributions)
- Timesheets or calendars showing who worked on what, and when
- A shared financial record, ideally linked to bookkeeping or accounting systems, that isolates eligible R&D spend
We often work with clients to build this system before they even begin an R&D project. Doing it early means your documentation becomes part of the process, not a post-project headache. It also makes compliance easier if your team changes or platforms evolve.
When needed, we integrate documentation workflows into budgeting and forecasting models as part of our strategic finance support, so that R&D management becomes part of your operational rhythm, not a separate burden.
Timeline of R&D Documentation, What to Capture & When
Documenting R&D is not a once-a-year task; it’s a process that starts the moment your team identifies a technical challenge. The earlier you begin, the more naturally the records will reflect your work. AusIndustry expects to see this timeline unfold through contemporaneous evidence, not retrospective summaries.
We guide businesses to align their record-keeping with the five key phases of an R&D project. Here’s what to capture at each stage:
Project Phase | Documentation to Create |
Problem Discovery | Define the knowledge gap. Include any literature reviews, expert advice, or technical limitations showing the problem hasn’t already been solved. |
Design & Planning | Draft project scope, define technical objectives, and document hypotheses. Include experimental plans or anticipated test conditions. |
Execution / Testing | Keep real-time logs of tests, changes made, observations, and setbacks. Tools like Git logs or lab notebooks are excellent here. |
Evaluation | Summarise outcomes, validate or revise your hypothesis, and document what you learned, even if the result failed. |
Submission & Audit Prep | Match records with financial data, time logs, and supporting documentation. This is when tax compliance teams coordinate with technical leads to finalise the claim. |
In practice, we’ve seen that the more detailed and consistent this timeline is, the less stress clients experience during review. It also makes identifying eligible activities easier when working across multiple departments or external contractors.
If your current documentation starts at the financial stage, we can help shift that responsibility earlier, so compliance becomes proactive, not reactive.
Common R&D Documentation Mistakes (And How to Avoid Them)
Many businesses unknowingly undermine their R&D Tax Incentive claims by treating documentation as a post-project task. These mistakes can lead to delays, audits, or even denied refunds. We see it often, good projects failing compliance simply because records were incomplete, vague, or backdated.
Below are the most common documentation issues we help clients correct:
Mistake: Retrospective Recordkeeping
Problem: Creating documents after the project is completed.
Fix: Document during the project. Use tools like Google Docs or time-tracking software that preserve timestamps and edit history. We help clients implement simple systems that work from day one.
Mistake: No Clear Hypothesis or Uncertainty
Problem: Describing what the team did, but not why or what was uncertain.
Fix: Each R&D activity must begin with a clear technical problem and a hypothesis. If this step is unclear, our tax advisory team can assist in aligning your scope with eligibility rules.
Mistake: Unsupported Contractor or Staff Time
Problem: Claiming labour costs without showing who worked on R&D and for how long.
Fix: Maintain employee timesheets, or implement a light time-tracking method. For subcontractors, collect statements of work or signed reports showing their contribution to eligible activities.
Mistake: No Link Between Financial and Technical Records
Problem: R&D expenses are claimed, but there’s no direct evidence showing how the cost supported a core activity.
Fix: Label invoices and internal transactions with project codes. Our CFO services help link documentation to eligible expenditure in your chart of accounts.
Mistake: Claiming Routine or Commercial Work
Problem: Activities that are commercially useful but not experimental are included in the claim.
Fix: Keep a “not claimed” file. This proves you’re actively filtering ineligible work, something AusIndustry looks for in serious applicants.
These mistakes are all fixable, but only if you spot them early. That’s why we recommend reviewing your R&D claim preparation at least quarterly, not just during tax time.
Get Expert Help with Your R&D Compliance
Building a successful R&D Tax Incentive claim isn’t about filling in forms; it’s about proving intent, process, and risk with the right evidence. That’s where many businesses fall short. We’ve seen strong ideas undermined by poor documentation and rushed end-of-year claims. It’s preventable, and we’re here to make sure you don’t make the same mistake.
We don’t take a one-size-fits-all approach. Whether you’re running complex software trials, iterative engineering projects, or refining medical processes, we help you build a real-time documentation workflow that matches your innovation style. Our team includes chartered accountants and R&D specialists with years of experience dealing directly with AusIndustry requirements.
What makes the difference is early planning. We support clients not only with preparing their claim but with setting up internal systems that manage compliance from day one, linking project documentation, costs, and eligibility with your broader tax and financial advisory strategy.
If you’re unsure where your current process stands, or if you’ve never documented R&D activities before, we offer a complimentary 30-minute eligibility and documentation review. It’s a risk-free way to identify what’s working, what’s missing, and how to build an audit-ready approach that’s tailored to your business.
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Disclaimer: We endeavour to make sure the information provided in this guidance is up to date and accurate. Please note, that the information is only intended to be a guide, with a general overview of information. This guidance is not a comprehensive document and should not be interpreted as legal advice or tax advice. The information is general in nature. You should seek the assistance of a professional opinion for any legal and tax issues related to your personal circumstances.
