R&D Tax Incentive – Unknown Outcome versus New Knowledge

Difference between unknown outcome and new knowledge


Understanding the concepts of Unknown Outcome versus New Knowledge is vital for companies involved in research and development (R&D) activities in Australia. This post explains these ideas with the help of historical Australian inventions, making it clear what is needed for eligibility under Australia’s R&D Tax Incentive.


What are the differences?

The R&D Tax Incentive in Australia helps support innovation by giving benefits to companies that carry out eligible research activities. To make sense of these benefits, it’s important to get to know two key concepts:

  • Unknown Outcome: Trying to reach a result that can’t be predicted with the information or expertise we have now.
  • New Knowledge: Coming up with new information or ways of doing things that help a particular area of study or industry grow.


Unknown Outcome

The concept of an “Unknown Outcome” is foundational to research and development (R&D) activities, particularly when exploring novel territories where the result cannot be accurately predicted based on current information or expertise.


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Trying to Reach a Result That Can’t Be Predicted

  • Lack of Precedent: Often, in the pursuit of innovation, researchers and scientists explore areas where there is little or no previous work to guide them. This lack of precedent makes it impossible to predict outcomes with certainty. It’s like navigating uncharted waters, where each step could reveal surprises that change the direction of research.
  • Technological Uncertainty: Sometimes, even when the goal is clear, the technological pathway to achieving it may be fraught with unknown variables. This uncertainty can arise from the limitations of current technology or unexplored interactions between different technologies. The unpredictability in how these elements might interact creates an unknown outcome.
  • Interdisciplinary Challenges: In many modern innovations, different fields of study intersect. An unknown outcome may stem from the fact that while expertise exists within individual disciplines, how they will interact in a complex system might be unclear. A good example of this is the development of medical devices involving both biological and mechanical systems.


New Knowledge

“New Knowledge” refers to novel information, methods, or approaches that contribute to the growth and advancement of a particular field of study or industry. It’s the driving force behind innovation and progress.


Coming Up with New Information or Ways of Doing Things

  • Discovery of Principles: The creation of new knowledge often involves uncovering fundamental principles that were previously unknown or misunderstood. These discoveries can redefine our understanding of certain phenomena and lead to innovative applications. For example, the discovery of the structure of DNA has transformed biology and medical science.
  • Innovation in Processes: Sometimes, new knowledge is not about discovering new facts but inventing new ways of doing things. This can include creating more efficient methods, reducing costs, or enabling entirely new capabilities. It’s about innovating within existing frameworks to push the boundaries of what’s possible.
  • Contribution to Industry Growth: When new knowledge is applied within an industry, it can lead to the creation of new products, improve existing ones, or open up entirely new markets. It’s an essential driver of economic growth, competitiveness, and societal advancement. It fuels the evolution of industries, making them more resilient and responsive to change.


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Worked Example 1: The Cochlear Implant

Unknown Outcome:
When Professor Graeme Clark initiated the research on the cochlear implant in the 1960s, the field of auditory neurology was at its infancy. The idea of artificially restoring hearing to those who were profoundly deaf seemed like a distant dream. Scientists and medical professionals had limited knowledge about how electrical stimulation could replicate the intricate processes of the human auditory system.

The ambition to develop an implantable device that could directly and effectively stimulate the auditory nerve was riddled with uncertainties. Various issues, from biocompatibility to precise nerve stimulation, posed formidable challenges, making the outcome unknown.

New Knowledge:
Professor Clark’s commitment to this revolutionary vision led to pioneering work in the intersection of medicine, engineering, and auditory neuroscience. Through exhaustive research and experimentation, his team not only managed to create a multi-channel cochlear implant but also gathered invaluable insights into auditory signal processing.

This breakthrough resulted in more than just a life-changing medical device. It reshaped our understanding of the human brain’s capability to interpret artificially generated sounds, and it set the stage for future innovations in neuroprosthetics and bioengineering.


Worked Example 2: Wi-Fi Technology

Unknown Outcome:
During the early 1990s, the team at CSIRO aimed to refine and improve wireless networks. At that point, the specific challenges posed by indoor radio signals and multi-path interference had stumped experts worldwide. The dream of developing a wireless technology that could seamlessly and reliably transmit data in fluctuating conditions seemed almost unattainable.

Given the prevalent technological limitations, designing a solution that could minimise interference and maximise speed was a daunting task. The unpredictable nature of indoor radio waves, coupled with rapidly evolving conditions, presented a truly unknown outcome.

New Knowledge:
Undeterred by the complexities, the CSIRO team’s ingenuity led to a novel chip that harnessed fast Fourier transforms. This chip was not just a technical marvel but a cornerstone in the evolution of wireless communication.

The knowledge derived from this innovation went beyond device development. It introduced new paradigms in wireless communication, providing foundational principles for countless subsequent technologies and devices. It catalysed a wireless revolution that now powers much of our modern digital world.


Worked Example 3: The Black Box Flight Recorder

Unknown Outcome:
In the mid-1950s, the aviation industry grappled with rising air accidents, and Dr David Warren envisioned a revolutionary solution: a device that could capture critical flight data. But how could extensive data be recorded in real-time, stored in a virtually indestructible container, and then retrieved after a potential crash? The feasibility of such a device was enigmatic, with technical challenges spanning multiple domains.

Creating a robust container that could survive extreme conditions, such as high-impact crashes or intense fires, while preserving the integrity of the data inside, presented a series of unknown outcomes that many deemed insurmountable.

New Knowledge:
Dr Warren’s relentless efforts led to the conception of the black box flight recorder. The development process not only resulted in this innovative product but also brought forth a trove of insights into materials, data storage, and sensor technologies.

This invention wasn’t merely a new device. It was a beacon of new knowledge that influenced global aviation safety standards, offering an understanding that transformed the protocols of flight safety. It set precedents and benchmarks, prompting aviation authorities worldwide to adopt and adapt this Australian innovation.


Who is Bulletpoint?

Bulletpoint is a Melbourne-based consultancy specialising in guiding businesses through the complex process of the R&D tax incentive. With a decade of experience and a proven track record, our approach is both straightforward and personable.

  • Experience: Over 500 R&D claims successfully lodged.
  • Reputation: Australia’s highest-rated R&D tax consultant.
  • Rating: An average of 4.8 stars from over 250 Google reviews.
  • Approach: Focusing on cutting through the jargon, helping businesses understand R&D in government terms.
  • Success: Praised for uncovering grants and making the process less stressful.


Ready to Begin Your R&D Journey? Reach Out to Bulletpoint!

If you’re looking to understand the definition of R&D and want to ensure that your business reaps the benefits it deserves, look no further than Bulletpoint. With our accessible expertise, proven success rate, and a blend of professionalism and personality, we’re here to make your experience not just successful, but enjoyable as well.

Whether it’s a question, a concern, or you’re ready to start your R&D claim, feel free to schedule a chat with me, your R&D tax consultant, at the following link: https://calendly.com/bencusack/rdtax. We at Bulletpoint are ready to guide you every step of the way, ensuring you get the most out of your R&D activities.

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