What is an R&D project under the R&D Tax Incentive?
Defining the role of projects in structuring eligible Core and Supporting R&D activities.
1. Overview
An R&D project represents the broader technical objective a business is pursuing through experimentation.
While eligibility under Division 355 is determined at the activity level (Core and Supporting R&D activities), projects provide the overarching structure that connects related experimental work.
An R&D project may involve:
- One or more Core R&D activities
- Associated Supporting activities
- Additional commercial or operational activities that are not eligible
The project defines the overall purpose and context of the experimentation.
2. Why This Matters for R&D Compliance
The R&D Tax Incentive registers activities, not projects.
However, projects are important because they:
- Demonstrate the technical objective being pursued
- Provide context for the experimentation
- Help distinguish eligible R&D from business-as-usual work
- Support consistent documentation across a financial year
Poorly structured projects often lead to:
- Fragmented activity descriptions
- Overlapping experimentation
- Difficulty explaining how activities connect
A clearly defined project strengthens the logical structure of a claim.
3. How It Relates to Synnch
In Synnch, projects act as the container for:
- Core and Supporting R&D activities
- Time allocations
- Evidence
- Expenditure tracking
Each project should describe:
- The overall technical objective
- The problem being addressed
- The intended outcome (at a high level)
Detailed experimentation steps should be documented within the Project Module through Activity Records or via the Timesheets.
This separation ensures clarity between strategic objective and experimental execution.
4. Practical Example
A company is developing a new AI-driven logistics optimisation engine.
The R&D project is the broader objective: creating a scalable optimisation solution capable of improving route efficiency beyond existing benchmarks.
Within this project, the company may define:
- Core activity: Experimenting with novel model architectures
- Supporting activity: Preparing structured training datasets
- Non-eligible activity: Commercial product launch preparation
The project provides context. The activities determine eligibility.
5. Common Mistakes
- Treating the project description as the experimental description
- Combining multiple unrelated technical objectives into one project
- Creating too many micro-projects for minor work streams
- Failing to distinguish commercial rollout from experimental development
- Writing vague project objectives without technical context