How the R&D Tax Incentive treats software and AI work — the experimentation and technical-uncertainty tests — and why routine programming does not qualify.
dgm is an independent osFoundry integration partner — not affiliated with osFoundry’s maker (OS LLC), and dgm has no completed client integrations yet.
The most common R&D Tax Incentive mistake in AI is assuming that building software is automatically R&D. It is not — eligibility turns on genuine experimentation.
| Item | Detail |
|---|---|
| Likely eligible | Experimental work with a technically uncertain outcome |
| Usually not eligible | Routine programming, configuration, bug fixes, deployment |
| Test | Could the outcome be known in advance using existing knowledge? |
| Evidence | Contemporaneous records of the experiment and uncertainty |
The eligibility test for AI software
The RDTI rewards Core R&D activities — experimental activities whose outcome cannot be known or determined in advance on the basis of current knowledge, conducted to generate new knowledge — plus Supporting activities. For AI, that might be developing a novel model or method where the result was genuinely uncertain, not applying an existing model in a standard way.
What usually does not qualify
Market research, routine quality assurance, bug fixes and maintenance, cosmetic UI changes, data entry, and standard configuration or deployment of off-the-shelf software generally do not qualify. (This exclusion list is paraphrased — confirm the specifics against the ATO’s software-development guidance.) Program parameters, amounts, rates and round windows change frequently — confirm the current details on the official program page before relying on them.
Getting it right
Keep contemporaneous records — the uncertainty you faced, the hypotheses, the experiments and the results — created at the time, not reconstructed later. Important: these are programs a business applies for directly with the government agency or, for the R&D Tax Incentive, claims through a registered tax adviser. dgm is an independent AI-integration agency — not a registered or approved program deliverer, an Industry Growth Program adviser, or a registered R&D tax agent. dgm can help scope and build the AI project; eligibility and any claim are determined and lodged by you or a registered adviser. dgm can help structure the project so genuinely experimental components are well-scoped; a registered R&D tax adviser determines eligibility and lodges the claim.
Where dgm fits
dgm is an independent integration partner that helps Australian businesses adopt osFoundry — scoping a first use case, handling the build, and connecting AI to the systems you already run. dgm can help you scope the AI project that a program would fund — but you apply to the program (or claim the R&D Tax Incentive with a registered adviser) directly. dgm is independent of osFoundry’s maker (OS LLC) and has no completed client integrations yet, so everything described here is a service offered, not a past result. If you want to scope a practical first project, dgm can help you map it out.