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About this hypothetical case study

Although your circumstances may appear similar to this case study, your activities may not be eligible. You need to assess your activities based on your specific circumstances. You must assess your activities against the legal requirements of the R&DTI program.

About Far Side

Far Side produce 3D visualisations of planets, stars and other astronomical features for both educational and scientific purposes. 

When a new planet is discovered, Far Side want to create a 3D visual model of this new planet for further study. They also want to integrate this as a new feature in their proprietary desktop software application. They have the qualifications, knowledge and experience they need to develop and produce visualisation software. Far Side also keeps up to date with new developments in relevant fields and consult with experts worldwide. They are competent professionals.

The challenge

There are a limited number of 3D image patches available of the new planet that the company intends to visualise. These patches represent the local geological environment of the planet. Viewers can zoom in or out for further details. When Far Side attempt to render these 3D patches, it results in visual blind spots and incomplete sections of the overall 3D model. To ensure a complete 3D render, Far Side searches worldwide for a solution to enable it to extrapolate the known 3D image patches to approximate what neighbouring patches might look like.

Far Side conduct searches of publicly available information and consult with other experts. In particular they look at photographic image processing software and terrain generation techniques used in gaming. Both of these methods create graphic patches based on surrounding elements. Limitations of these methods mean that Far Side cannot simply apply them as intended to extrapolate 3D samples to complete a 3D render at planetary scale.

Far Side need the generated patches to match smoothly and continuously with known patches to give a realistic picture of the entire planet. They establish that current mathematical models do not support the available 3D data. After they trial known options and methods, they realise the only solution is to develop a new method to build a realistic 3D visualisation of the new planet. 

Experiments to test hypotheses 

The company plans a set of experiments to test hypotheses that relate to how to generate the missing patches. For example, one hypothesis they intend to test relates to how to achieve a 3D composite that retains the geographical features of the available 3D sample patches.

Far Side establish that they can only determine the outcome of their activities if they conduct experiments to test their hypotheses.

Self-assessment

Far Side refer to the self-assessment tool in the Guide to Interpretation to help them assess if they’re eligible to register and claim for the R&DTI. They refer to the Income Tax Assessment Act 1997 (ITAA) as they use the tool and answer the 4 questions. 

Read Far Side’s self-assessment below. You may use this as a guide for how to assess if you’re eligible for the R&DTI program.

Far Side check the requirements for eligible R&D entities on the Australian Taxation Office (ATO) website. Their company is a body corporate incorporated under Australian law. It’s not an exempt entity. It meets the requirements of section 355-35 of the ITAA.

Self-assessment: Yes.

Far Side check the requirements for eligible R&D activities. As they develop their project plan, they assess the activities they plan to conduct against the definitions for core and supporting R&D activities in the legislation. 

Part 1: Far Side’s core R&D

Far Side assess that their activity to develop a mathematical framework to generate 3D solid patches is a core R&D activity. They assess that this activity meets the definition in section 355-25 of the ITAA because:

  • there’s no current knowledge that can tell them how to achieve their desired outcome 
  • they can only determine the outcome through a systematic progression of work that is based on principles of established science 
  • they plan to conduct experiments to test their hypotheses about how to develop new 3D patch generation techniques 
  • in their experiments they'll build and test new models for 3D generation 
  • they plan to observe the effect of different input variables through their experiments
  • they plan to evaluate results to reach logical conclusions. This includes conclusions about why certain model parameters might result in a mismatch between real and generated planet images 
  • they plan to document their activities and conclusions they reach
  • their purpose is to generate new knowledge in the form of new 3D generation techniques and an improved software product
  • their activities are not excluded core R&D activities.

Does Far Side have at least one core R&D activity that meets the requirements of section 355-25(1) of the ITAA?

Self-assessment: Yes.

Is Far Side’s core R&D activity excluded under section 355-25(2) of the ITAA?

Self-assessment: No.

Overall self-assessment: they assess that they have one core R&D activity that meets the requirements in section 355-25 of the ITAA. 

Far Side assesses that their core R&D is eligible.

Part 2: Far Side's supporting R&D

Far Side assess that some of their activities are supporting R&D activities. This includes activities they conduct to manage their project, develop evaluation software for a test environment and obtain data for evaluation. Far Side is able to show that these activities directly relate to their core R&D activity. 

They plan to start their supporting R&D activity before they start their core R&D activity. It will continue while they conduct their core R&D activity and finish about a month after the core R&D activity. Far Side decide that these activities are a single supporting R&D activity. This is because they all support the same core R&D activity and run for about the same amount of time.

Far Side review Subdivision 355‑B of the ITAA. They assess that their supporting R&D activity does not produce, or relate to producing, goods or services under section 355-30(2) of the ITAA. They also assess that it’s not an excluded core R&D activity under section 355-25(2) of the ITAA.

Does Far Side’s supporting R&D activity directly relate to their core R&D activity as required by section 355-30(1) of the ITAA? 

Self-assessment: Yes.

Does Far Side’s supporting R&D activity produce, or relate to producing, goods or services? 

Self-assessment: No.

Is Far Side’s supporting R&D activity an excluded core R&D activity under section 355-25(2) of the ITAA? 

Self-assessment: No. 

Overall self-assessment: they assess that they have one supporting R&D activity that meets the requirements in section 355-30 of the ITAA.

Far Side assesses that their core and supporting R&D is eligible.

Far Side review information from the ATO on eligible expenditure. They assess that they can claim expenditure on eligible R&D activities in their tax return. They do this after they receive their notice of registration in the R&DTI customer portal.

Self-assessment: Yes.

When Far Side start their activities, they implement a system to keep records to show that their activities meet the requirements of the R&DTI program. They also keep records of eligible R&D expenditure that show the link to their eligible R&D activities.

Self-assessment: Yes.

Overall self-assessment: after answering the 4 questions above, Far Side assess that they’re eligible to register for the R&DTI program.

Registration

Far Side start their activities at the beginning of a financial year. After the end of the financial year, they apply to register their activities in the R&DTI customer portal. They then claim associated eligible R&D expenditure in their income tax return with the ATO. They register their core and supporting R&D activities:

  • Core Activity 1 – Development of a mathematical framework for 3D patch generation 
  • Supporting Activity 1.1 – Project management and dynamic data integration.

Read example responses from Far Side’s application for registration below. You may use this as a guide for how to respond to questions when you register your R&D activities. Please note that examples of all response fields do not appear below.

What are the objectives of this project?

(Guide: enter a maximum of 1000 characters. At the project level the objectives may be described fairly broadly and can include both research and development and commercial aims.  Please ensure your response allows AusIndustry to understand the purposes for conducting the project.)

Example response: Far Side produce 3D visualisations of planets, stars and other astronomical features for both educational and scientific purposes. The objective of this project is to add new functionality to our proprietary software application, enabling 3D visualisation of a new planet. To achieve this, we need to create new mathematical and/or statistical frameworks to extrapolate a three-dimensional (3D) sample onto a neighbouring patch of a 3D object where only a limited number of 3D image patches are available. 
 
We plan to create the proprietary model to build a realistic 3D graphic visualisation of an entire planet surface. 

Name for this core activity

Guide: If you have registered this core activity before please use the same name.

Example response: Development of a mathematical framework for 3D patch generation.

A brief description of the activity

Guide: Enter a maximum of 1000 characters. 

Example response: There are only a limited number of 3D image patches available of the new planet that we plan to visualise. These patches represent the local geological environment of the planet. Viewers can zoom in or out for further details. When we attempted to render these 3D patches, it resulted in visual blind spots and incomplete sections of the overall 3D model. To ensure a complete 3D render, we looked worldwide for a solution to enable us to extrapolate the known 3D image patches to approximate what neighbouring patches might look like. 

We conducted searches of publicly available information. In particular, photographic processing software, and terrain generation techniques used in gaming, both of which create graphic patches based on surrounding elements. None of the existing code or methods we identified could be extended for use with limited 3D samples extrapolated at a planetary scale.

We established that we needed to generate patches to be smoothly and continuously matched with the known patches to give a realistic representation of the entire planet. We found that the current mathematical models do not support the available 3D data. After we trialled different options and methods, we realised that the only solution is to develop new techniques to build a realistic 3D visualisation of the new planet. We planned and conducted a set of experiments to test hypotheses that relate to how to generate the missing patches.

What was the hypothesis?

Example response: Our hypothesis was that we could build a new mathematical and statistical framework for 3D patch generation to achieve a smooth and continuous graphic visualisation of an entire planet surface from a limited selection of known 3D patches.

What new knowledge is this core activity intended to produce?

Example response: The new knowledge we set out to create is new theoretical understanding about 3D extrapolation. In particular, we needed to find out how to extrapolate a known 3D sample onto a neighbouring patch of a 3D object. We will use this new knowledge to develop a new software application (a new product).

Please explain what sources were investigated, what information was found, and why a competent professional could not have known or determined the outcome in advance.

Example response: We consulted with experts and searched worldwide. We could not find current knowledge, information or experience to tell us how to achieve the outcome. 

Current knowledge in relation to solid texture synthesis does not extend to generation using 3D geological samples. We concluded that we must conduct a systematic progression of work to determine whether we could create a model to enable 3D visualisation of the new planet. This was the only way we could determine the outcome of our activities.

What was the experiment and how did it test the hypothesis?

Example response: We designed experiments to test our hypotheses, in which we built and tested a series of new models employing new 3D generation techniques. The experiments investigated the effects of different model inputs on the generation of 3D images. 

For example, we investigated the effect of new mathematical models on the relationship of real image patches to extrapolated samples. To do this we developed iterations of proposed code solutions to compare the continuity for a sample and generated patches, and the level of realism of the resulting images. 

Experimentation on benchmark datasets demonstrated our method significantly outperforms commonly known methods. This involved developing sample test sets, setting up the test environment and conducting the experiments. 

For each set of experiments, we recorded the inputs we varied, those we held constant, and the outputs we observed or measured.

How did you evaluate or plan to evaluate results from your experiment?


Example response: 
We used images of known geological features of a nearby object (the Moon) to validate our results and evaluate the accuracy of extrapolation. In relation to the quality of images around the edges of known 3D samples, we were able to reach logical conclusions about resulting mismatches between real and extrapolated images. We also evaluated how realistically our new code rendered a planet surface within acceptable response times. 

Describe those conclusions

Example response: Through our experiments, we were able to develop a new mathematical and statistical framework for 3D patch generation. We confirmed our hypotheses about how to develop this framework. This included conclusions about what we need to do to minimise mismatches between real and extrapolated images.

Name for this supporting activity

Example response: project management and dynamic data integration

Briefly describe this supporting activity

Example response: literature and patent searches and discussions with experts to assist us to develop our hypotheses. Obtaining data samples (3D planetary images). Development of evaluation software (test environment). Management of project activities related to our core activity.

How did this activity directly support the core activities?

Example response: our literature and patent searches supported development of our hypotheses and design of our experiments. We needed the test environment to conduct our experiments. We needed 3D planetary image samples from an external data source to evaluate the 3D images we produced in our experiments.

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