What was broken
A clean-energy startup with proprietary waste-processing technology was unaware that it qualified for a startup tax incentive. The founders were preparing for expansion and wanted to preserve cash for product development rather than pay avoidable income tax.
What we did
CapEasy evaluated the company's eligibility, documented its innovation narrative, prepared technical and commercial justifications, coordinated with the founders to compile supporting evidence, and managed the complete application process under the national startup recognition program.
Where it landed
The startup successfully secured recognition under the incentive, making it eligible for a three-year income-tax exemption. The tax savings strengthened the company's cash flow and allowed management to accelerate investment in research, manufacturing, and market expansion.
What an Australian R&D claim actually has to show
The R&D Tax Incentive is not a form you fill in from memory at year end — it is a claim about specific activities, and the eligibility test is written around what those activities were, not what the company is. Core R&D activities are experimental activities carried out to generate new knowledge, where the outcome cannot be known or determined in advance and the work follows a systematic progression from hypothesis to experiment to evaluation to conclusion. Activities that are merely adjacent to that — engineering-as-usual, routine testing, commercial trial-and-error without a genuine knowledge gap — do not qualify on their own; they have to be shown as directly related to a core activity that does.
The programme also has hard numeric gates: a company generally needs to have spent at least $20,000 on eligible R&D in the year to claim, and the maximum expenditure claimable in a single income year is $150 million. Both thresholds matter for planning — the floor rules out claiming a token project, and the ceiling means a claim above it needs to be split or capped in the application itself.
The evidence chase is the same discipline, aimed at different forms
The engagement's method is exactly what an R&DTI registration needs, pointed at a different regulator: an innovation narrative that states what was unknown at the start, a technical justification for why the work qualifies as experimental rather than routine, and supporting evidence compiled from the people who actually did the work, not reconstructed afterwards from memory. For R&DTI specifically, that evidence has a shape assessors look for — project and experiment records showing the hypothesis being tested, dated technical notes or lab/build logs, time records that tie staff hours to the specific R&D project rather than the business generally, and financial records that isolate R&D expenditure from ordinary operating cost.
The failure pattern is identical to the one this engagement avoided: a company doing genuinely eligible work but with no contemporaneous record of it, so eligibility has to be argued after the fact from whatever survives in emails and invoices. Built as the work happens — a project register updated as experiments run, timesheets coded to the project, technical notes kept alongside the code or the build — the same evidence is a same-day export instead of a reconstruction project.
ESIC status is self-assessed — which makes the file the whole case
Australia's early stage innovation company (ESIC) status works differently again: a company self-assesses against an early-stage test and an innovation test, rather than applying for a determination up front. That self-assessment is only as strong as the record behind it — the same kind of technical and commercial justification this engagement built for a tax exemption is what a company's registered tax agent or accountant needs on file to support telling investors, in writing, that ESIC treatment applies to their shares. Get the self-assessment wrong and it is the investor's tax offset that unwinds, not just the company's paperwork, which is why the underlying file matters more than the box being ticked.
CapEasy's part in both incentives is the same as it was in this engagement: building and organising the evidence — the narrative, the project records, the expenditure schedule tied to the ledger. The eligibility determination itself, the R&DTI registration with the Department of Industry, Science and Resources, and any ESIC self-assessment statement to investors are prepared for your registered BAS or tax agent to review and lodge.
What to take from it
- An R&D claim is won or lost on whether the activities were experimental and undetermined in advance, not on how the company describes itself.
- The $20,000 minimum and $150 million annual cap on R&D expenditure are hard gates a claim has to plan around, not fine print.
- Contemporaneous project records — dated technical notes, hypothesis-linked experiment logs, project-coded timesheets — are what turns eligible work into a defensible claim.
- ESIC status is self-assessed, so the file behind the self-assessment is the entire case if it is ever tested.
- The eligibility narrative and the evidence file are built well before lodgment — building them after the fact is reconstruction, not compliance.