When claiming expenses as a core activity for the R&D Tax Incentive, AusIndustry requires businesses to show examples of their experimental work. Demonstrating that the work follows the scientific method (another requirement for the R&D Tax Incentive) starts with a testable hypothesis.

What is a testable hypothesis? This is a question some businesses find difficult to answer.

A hypothesis is different to an aim or a goal. These often describe the reasons for test work, or the final desired outcome of the tests. The hypothesis is a single idea that can be proven true or false by running a test. It typically includes an action and an expectation – “if I do or change this, then the result will be this”.

The type of test will vary depending on whether a product, process or service is being tested. It could involve running a new software program to see if it gives the expected outputs, or seeing if a new cleaning agent cleans as well or as fast as predicted.

Running the experiment will show whether the expectation in the hypothesis was achieved or not. Remember, AusIndustry is also interested in examples where the hypothesis was proven wrong – failed experiments illustrate the technical risk in a company’s R&D activities.

It’s National Science Week!

Celebrating science and technology, National Science Week brings awareness and inspiration to a wide audience from children to the young at heart. Whilst many events are held by schools, universities and museums, science and technology can be found all around us in businesses and activities of all kinds.

So, what is “science”? Wikipedia notes: “Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe.”

The scientific method describes the procedure that has characterised natural science since the 17th century, consisting in systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses.

“Technology” also isn’t limited to WhatsApp software, iPhones, and Amazon Echos. Google’s dictionary defines technology as the application of scientific knowledge for practical purposes, especially in industry.

Traditionally, we see science as things like mathematics, chemistry, physics, medical research, people in lab coats, chemical beakers and rocket scientists. But science forms the backbone of all kinds of research and development (R&D). It is the basis of how most of us learn. From kids figuring out how things work: Dog is sleeping (observation). What happens if I poke the dog (question)? It might wake up (hypothesis). Poke dog (experiment). Did it wake up? No. (Analyse result.) Poke harder, dog wakes up. New knowledge remembered for future dog waking needs; to the Aussie scientists (Ian Frazer, along with his colleagues) who developed the vaccine designed to prevent HPV infections (Human Papilloma Virus) and cervical cancer; the method is basically the same.

As the question and solution becomes more complex, there is a greater benefit of having good records. Children are taught to write down their scientific endeavours on a piece of paper (such as the dog poking experiment), and pharmaceutical research teams may have dedicated documentation specialists and software.

Keeping records, in any form, helps us work systematically through problems and contributes to the reporting of the journey to others, be it the kid next door who also has a dog, or in giving the vaccine recipe to the manufacturer.

Record keeping is also a key requirement for claiming expenditures in the Australian Government’s R&D Tax Incentive scheme. Following the scientific method, a claimant needs to record their activities in developing new knowledge. That new knowledge needs to be new on a global basis, so dog poking might be new to you, but isn’t new globally. It’s been done before!

What’s absolutely fascinating, however, is the breadth of what can be eligible R&D activity in terms of the R&D Tax Incentive. Not all R&D needs to be done by lab coat wearing scientists looking through microscopes, or concocting mixtures in glass beakers. Movie famous back shed inventor, Doc Emmett Brown from, “Back to the Future” conducted R&D (though I suspect his documentation was fairly poor). So too did the Sydney programmers who invented what is now known as Google Maps.

Above – Doc Emmett Brown – Back to the Future

From software development, advanced manufacturing techniques, and new product development (digital and traditional), to medical devices, medicines and everything in between, R&D is done by all types of people at all kinds of scale.

Everyone can science. Science can happen anywhere. Keep records, and maybe the team at Access RnD can help you access the R&D Tax Incentive.

Happy Science Week!

Written by Darren Wu. Originally posted on LinkedIn.