R&D Tax Incentive
The R&D Tax Incentive for fintech companies
Fintech sits in an awkward spot for the R&DTI: heavy engineering spend, but much of it driven by regulation, integration, and product delivery, three things the program explicitly does not reward. The eligible core is real, it is just narrower than the engineering budget, and fintechs that claim the budget instead of the core are the ones that struggle in review.
Where the R&D actually lives
Genuine fintech R&D concentrates in modelling and infrastructure: a fraud or credit model achieving discrimination the published art does not reach for your data, a ledger or matching engine with correctness and latency properties no documented design guarantees, novel privacy-preserving computation over financial data. Connecting to payment rails, implementing standards, and building compliance workflows are engineering, not experiments.
What qualifies, and what does not
| Activity | Eligible? | Why |
|---|---|---|
| Developing a fraud detection model where the achievable precision/recall on your data is genuinely unknown | Likely core | Technical uncertainty resolved by systematic experiment |
| Designing a real-time ledger or matching engine beyond documented consistency/latency limits | Likely core | Outcome unknown to a competent professional |
| Building synthetic transaction datasets and backtest rigs solely for those experiments | Supporting | Directly enables the core activity |
| Integrating with banking APIs, card schemes, or the CDR per documentation | No | Routine integration |
| Building KYC/AML compliance workflows | No | Excluded: compliance with statutory requirements |
| Rebuilding internal finance and reporting tools | No | Excluded: internal administration software |
Classifications are indicative: eligibility always turns on the specific facts, the four criteria in Division 355, and the records behind the work.
The evidence you already produce
Model development leaves strong records when experiment tracking is on: training runs, backtests, evaluation metrics, and the dated analysis of approaches that failed. Infrastructure work needs its design documents, load test results, and incident analyses kept and linked to the named uncertainty they address.
Watch-outs for fintech companies
Regulatory drivers are the recurring trap: work you must do to satisfy a regulator is excluded compliance activity even when it is technically demanding. Distinguish the compliance obligation (excluded) from any genuine research needed to meet it in a novel way (potentially eligible, claim it as its own activity). Security hardening to known standards is likewise engineering practice, not R&D.
Frequently asked questions
- Is fintech development eligible for the R&D Tax Incentive?
- The experimental core can be: novel risk models, infrastructure with genuinely unknown performance properties, new privacy-preserving techniques. Integrations, compliance builds, and product features assembled from known components do not qualify.
- Does work required by regulators qualify?
- No. Compliance with statutory requirements is an excluded activity. If meeting a requirement genuinely demanded novel research, that research can be claimed as its own activity, but the compliance implementation itself cannot.
- Can we claim our fraud model development?
- If the achievable performance on your data was genuinely unknown and you resolved it through documented, hypothesis-driven experiments, yes. Applying documented techniques to a predictable result, or tuning a vendor's model, does not qualify.
- What records do fintech claims need?
- The same chain as any software claim: documented uncertainty, hypothesis, experiment, evaluation, and conclusions, created contemporaneously, plus time records linking each person's hours to specific activities. Model experiment trackers and backtest logs are ideal.
Guides for fintech companies
R&D Tax Incentive for software development: 2026 guide
Software is one of the most-claimed and most-scrutinised areas of the R&D Tax Incentive. This guide maps the four eligibility criteria to real software work, with examples of what qualifies, what does not, and the traps that sink claims.
Read articleIs AI and machine learning development eligible for the R&DTI?
AI and machine learning work is a rich source of genuine R&D, and a fast-growing target for ATO scrutiny. Here is how the eligibility test actually applies to AI development, with examples of what qualifies and what does not.
Read articleCore vs supporting R&D activities, and why it now matters more
The distinction between core and supporting R&D activities has always mattered. From 1 July 2028 it becomes decisive, because supporting activities lose eligibility. Here is how to tell them apart and classify your work correctly.
Read articleThe R&D Tax Incentive is a self-assessment program. This page is general information, not tax, legal, or financial advice; eligibility depends on your specific circumstances and you should seek independent advice for them.