What contemporaneous documentation means
Contemporaneous documentation is evidence created while R&D activities are planned and conducted — not reconstructed afterwards at claim time. For the R&D Tax Incentive (RDTI), it is the record, made as the work happens, of the technical unknown an activity set out to resolve, the experiments run to resolve it, the results, and how each cost ties back to the activity that incurred it.
The word does a lot of work: contemporaneous means "made at the time". A note written in March about an experiment run in March is contemporaneous. A narrative assembled in October to justify that same experiment is not — even if it describes the work accurately.
Why the regulators weight it so heavily
The RDTI is a self-assessed program. A company registers its activities with the Department of Industry, Science and Resources (DISR/AusIndustry), claims the offset through the ATO, and the claim can be reviewed afterwards — sometimes years later. At that point, the only thing standing between a claim and an adjustment is the evidence behind it.
The ATO and AusIndustry have consistently stated that R&D entities should keep records at the time the activities are conducted, because records made contemporaneously are the most reliable evidence of what was actually done (ATO — Helping you get R&D claims right).
That expectation has been tested at the Administrative Appeals Tribunal — since October 2024, the Administrative Review Tribunal. In Tier Toys Limited v FC of T [2014] AATA 156 the claimed offset was reduced from $369,999 to $24,916 because the records were missing, so the expenditure could not be shown to be "directly in respect of" eligible activities. In Ozone Manufacturing Pty Ltd v FC of T [2013] AATA 420 an offset claim of $388,601 was assessed to nil where contemporaneous records had not been kept and the spend could not be distinguished from ordinary business costs.
Reconstructed documentation is permitted. It is simply given less weight, precisely when weight matters most — during an examination.
What a contemporaneous record actually shows
For each R&D activity, contemporaneous records typically capture four things:
- The technical unknown. The hypothesis or specific hurdle you set out to resolve, recorded before the work, including why existing knowledge or methods could not resolve it.
- The experiments, dated. The systematic progression of work — what you tried, the iterations, and the attempts that failed — logged as it happened.
- The results and conclusions. What each experiment showed, and how it informed the next step.
- The link to expenditure. Which costs (labour, contractors, consumables) were incurred on which activity.
This mirrors the legislative test for a core R&D activity: a systematic progression of work — hypothesis, experiment, observation, evaluation, logical conclusions — directed at an outcome that could not be known or determined in advance. (business.gov.au — Assess if your R&D activities are eligible)
Retrospective vs contemporaneous
| Reconstructed at year-end | Contemporaneous (as-you-go) | |
|---|---|---|
| When the record is created | After the work, at claim time | While the activity happens |
| What it can show | A narrative of what probably happened | A dated trail of what did happen |
| Weight under examination | Lower — memory and inference | Higher — made at the time |
| Failed experiments | Often forgotten | Captured (and failures are evidence of experimentation) |
| Expenditure linkage | Re-derived from accounts | Tied to the activity as incurred |
The mechanics of a claim do not change. The strength of the evidence behind it does.
What counts as a record
Contemporaneous evidence is not a single mandated document — it is whatever, made at the time, demonstrates the technical hurdle and the work to overcome it. AusIndustry's software sector guidance points to ordinary work artefacts as acceptable, including "spike tickets or investigation tasks, design notes, architecture decision records, emails and chat messages, test plans and outputs." (business.gov.au — Software development sector guide)
The point is not to generate new paperwork. It is to retain, in dated and structured form, the records the work already produces — before they are lost, overwritten, or left to memory.
Records may be kept on paper or electronically, and must be in English or readily translatable into English. (business.gov.au — Record keeping for the R&D Tax Incentive)
How long do R&D records need to be kept?
Five years from the date you make the claim. The ATO may ask to see the records at any point in that window, and failing to keep them can mean the offset is repaid, with penalties in some circumstances. AusIndustry can separately require you to substantiate registered activities going back several years. (ATO — Keeping records and calculating your notional deductions)
That retention window is the practical argument for capturing evidence as the work happens. Five years after lodgement, the engineers who did the work may have left, the chat history may have rolled off a retention policy, and the repository may have been restructured. A dated record made at the time survives all three; a memory does not.
Where claims most often come unstuck
Across the published Tribunal decisions and the regulators' own guidance, the recurring failures are consistent:
- The technical unknown was never written down before the work started, so what remains reads as ordinary product development rather than a systematic progression toward an unknown outcome.
- Only successes were recorded. Failed iterations are evidence of experimentation, and omitting them weakens rather than tidies the record.
- Expenditure cannot be traced to a specific activity, so costs cannot be shown to be "directly in respect of" eligible activities — the precise failure in Tier Toys.
- Everything was assembled in one sitting at year-end, which is permitted, but carries the least weight exactly when it is tested.
For the surrounding rules — what counts as a core versus a supporting activity, and what the ATO looks for in a review — see the plain-English guide to the R&D Tax Incentive rules. If a claim is later amended, the interest on the shortfall is now a non-deductible cost: GIC and SIC are no longer tax-deductible from 1 July 2025.
Dossio is infrastructure for exactly this: capturing R&D evidence in structured, dated, audit-ready form as the work happens, with R&D tax experts providing oversight and governance.
Sources
- ATO — Helping you get R&D claims right
- business.gov.au — Assess if your R&D activities are eligible
- business.gov.au — Software development sector guide for the R&D Tax Incentive