The offset
Turnover under A$20 million: a refundable offset of the company tax rate plus 18.5 points. Turnover of A$20 million or more: a non-refundable offset set by R&D intensity.
Contract R&D and public-good AI partnerships
We carry out contract R&D for Australian companies, scoped and recorded so eligible work can support an R&D Tax Incentive claim, and we act as the technical delivery partner for charities, research consortia and university projects that need AI built properly.
- Fixed feeScope and fee agreed in writing first
- Evidence keptHypotheses, experiments and results recorded
- You own the resultsCode, models and findings assigned to you
- Your adviser decidesWe supply the evidence, not tax advice
What is contract R&D?
Contract R&D is research and development that a company commissions another business to carry out for it. Under Australia's R&D Tax Incentive, a company can include eligible R&D it commissions in its own claim, as long as the work meets the program's rules: the outcome cannot be known in advance and has to be found by experiment, the activities are registered with the Department of Industry, Science and Resources each year, and the company claims the offset through its tax return.
We design and run that work for custom algorithms and AI: forecasting, optimisation, detection and decision models whose results have to be found by testing.
For commercial clients
Contract R&D for Australian companies
Eligible Australian companies can structure custom AI algorithm development as contract R&D under the R&D Tax Incentive. Under the current rules, a company with aggregated turnover under A$20 million receives a refundable tax offset of its company tax rate plus 18.5 percentage points: 43.5% for a company taxed at the 25% base rate.
The A$20,000 threshold
A company's eligible R&D must total at least A$20,000 in the income year, unless a registered research service provider conducts it. Work with us counts alongside your other R&D.
What can qualify
New algorithms, models and methods whose results can only be found by experiment. Software built mainly for your own internal administration is excluded.
Records as we go
The technical uncertainty, hypotheses, experiments and results documented while the work happens, so your adviser has the evidence to assess and register it.
Fixed scope, fixed fee
Each R&D stage has a written scope, a fixed fee and a decision point, so you can stop when the evidence says to.
Changes from July 2028
The 2026-27 Budget announced changes to the program that start on 1 July 2028. Until then, the current rules apply.
- Company tax rate25%
- Refundable R&D offset43.5%
The offset is the company tax rate plus 18.5 percentage points. General information, not tax advice: see the R&D Tax Incentive overview on business.gov.au.
General information, not tax advice, checked against the R&D Tax Incentive overview and eligibility rules on business.gov.au in October 2026. Eligibility is self-assessed with your registered tax adviser, registered with the Department of Industry, Science and Resources and claimed through the ATO.
Fixed-scope work under A$20,000
Smaller pieces of work are scoped and priced up front. How each one is treated for tax depends on your business, so check with your adviser.
Prices in Australian dollars, excluding GST. Scope and fee are confirmed in writing after a free call.
For philanthropic and grant partners
A technical delivery partner for public-good projects
We are available as a technical delivery partner for charities with deductible gift recipient status, Cooperative Research Centres Projects (CRC-P) consortia and university research grants.
Charities and auspiced projects
Charities with DGR status, including those auspicing a community project, can engage us to build and run the technology for their own programmes. The charity keeps control of its funds and decisions.
CRC-P consortia
An industry partner in Cooperative Research Centres Projects: industry-led collaborations between businesses and a research organisation, with the grant matched by the partners' cash or in-kind contributions.
University research grants
An industry or delivery partner on university-led projects, from feasibility studies and prototypes to research-grade software and documentation.
What funders and partners get
Milestones you can report
Deliverables mapped to your grant milestones and reporting dates.
IP and publication agreed
Ownership, licensing and publication terms set before work starts.
Research-grade records
Methods, experiments and results documented for review, audit and acquittal.
Data handled safely
Australian data residency by default, and work inside your environment when needed.
How it works
- 1
Talk to us
The problem, the funding route and the deadline.
- 2
Scope in writing
The activities, the technical uncertainty, the milestones and a fixed fee.
- 3
Build and record
Experiments run and documented as they happen, with decision points you control.
- 4
Hand over
Code, models, results and the records your adviser or funder needs.
Can you advise us on our R&D Tax Incentive claim?
No. We are not tax agents and do not give tax advice. Your registered tax agent or R&D adviser decides whether your activities are eligible and prepares the registration and claim. We provide the technical work and the records of it.
Does our work with you count towards the A$20,000 threshold?
Eligible R&D you commission from us counts towards your company's total eligible R&D for the income year, alongside your other R&D. The total must be at least A$20,000 to claim, unless the R&D is conducted by a registered research service provider. Your adviser confirms what is eligible.
Who owns the results of contract R&D?
You do. Results, code and models created for you are assigned to you on payment. We keep our pre-existing tools and methods and grant you a perpetual licence to any that are embedded in your solution.
Can gifts to Sovereign Systems Labs be tax-deductible?
No. Sovereign Systems Labs is a technology company and is not registered as a charity, so gifts to us are not tax-deductible. Charities with deductible gift recipient status can engage us for their own programmes: they keep control of their funds and choose their suppliers.
Can you join our CRC-P or university grant application?
Tell us the lead organisation, the research partner, the project and the closing date. We will tell you plainly whether we can add value and what our role would be, and agree publication and ownership terms before anything is submitted.
What happens if an experiment does not work?
That is part of R&D, and it is recorded like any other result. Each scope has decision points, so you can stop, change direction or continue based on the evidence.
Contract R&D and partnerships
Discuss a project
Tell us what you want to research or build and how it is funded: your own budget under the R&D Tax Incentive, a charity programme, a CRC-P or a university grant. We reply within one business day and are happy to sign an NDA first.