When a listed company like Careteq Limited is asked by the ATO to repay more than $2.6 million in R&D Tax Incentive refunds, it sends a shockwave through the R&D community. Not because it’s rare, but because it’s avoidable.

The amended ATO assessment reportedly found that Careteq hadn’tsufficiently demonstrated the link between its claimed R&D activities and the associated expenditures. That single phrase “sufficiently demonstrated” is the difference between receiving millions and paying them back with penalties and interest.

For anyone involved in R&D, this case is a reminder that goodscience isn’t enough, it also needs good evidence.

The Real Issue

The Careteq story isn’t just about an ATO disagreement; it’s about process maturity. It’s about whether a business can trace, with confidence and documentation, what happened in an R&D projectfrom idea to experiment to expenditure.

Too often, companies and consultants focus on eligibility and treatevidence as an afterthought. Consultantsreconstruct the story at year-end, long after the data, context, and technical details have faded.  

That’s where things go wrong. Because when the ATO asks for proof, reconstruction won’t cut it. Contemporaneous evidence is needed, such as activity logs, timesheets, design iterations, failed tests, meeting notes, all linked clearly to the claim narrative. At Synnch, we’ve been talking about this problem for nearly 10 years! And more importantly, we’ve built the system to solve it.

The Synnch Way: Framework → Evidence → Analysis

Long before “evidence-first” became a buzzword, Synnch embedded it into our DNA.

Our methodology: Framework → Evidence → Analysis was designed to keep R&D claims audit-ready from day one. It’s not a checklist; it’s a continuous process and behaviour that mirrors how innovation actually happens inside a business.

1. ‍Framework: Definition of projects, core and supporting activities, and the boundaries of eligible work. This establishes structure, what’s in, what’s out, and how it’s captured.
2. ‍Evidence: Capturing and storing everything that demonstrates what occurred: documents, Jira tickets, design updates, testresults, emails, timesheets, photos. The Synnch App doesn’t just store evidence, it evaluates it. Our AI identifies gaps, links evidence to activities, and flags risk areas.
3. ‍Analysis: Turn the data into claim-ready insight. Whether you’re writing a new claim, uploading an existing one for review, o rusing SynnchAI to interrogate quality and risk, the output is the same: structured, defensible, and ready for scrutiny.

This approach means you’re not scrambling at year-end. You’re building compliance as you go, not after the fact.

Why It Matters Now More Than Ever

The ATO’s position is evolving. It’s no longer enough to simply register activities with DISR and hope your everything aligns. Nor can you say “I used a consultant” soeverything must be ok. The ATO and DISR expect a clear, traceable narrative; one that connects R&D intent, activity, and cost. That shift makes evidence management the new frontier of R&D governance.

It's not just about avoiding penalties and having to pay back your R&D benfits plus interest which should be enough. Strong evidence improvesthe quality of a claim, strengthens eligibility arguments, and provides confidence for CFOs, auditors, and investors.

Addressing Industry Resistance to AI-Powered Solutions

It’s no secret some traditional R&D consultancies remain cautious (or sceptical) about AI-powered tools and platforms. That’s understandable, change is hard, fee-models may feel challenged, and human – consultant remain essential.

Here’s our take: AI isn’t replacing Consultant, it’s enabling them. At Synnch, our R&D Chat interface isn’t a black box; it’s a supportive tool trained on Australian R&D Tax law in a data secure environment. It prompts users, highlights risk areas, surfaces what’s missing but the human always remains in the loop.

As compliance stakes get higher (see Careteq), businesses need scalable, structured, repeatable processes. That’s what a platform brings.

We see expected resistance in the market steming from the belief “we’ve always done it this way” or “consultants will always keep control.” But this evolution isn’t about replacing the consultant, it’s about augmented workflows, stronger evidence captures, and better readiness for what the ATO expects.

We've Been Ready for Years

It’s easy to look at the Careteq case and assumeit’s a wake-up call for the industry. We see it as validation of the approachwe’ve been championing since day one. When we built the Synnch platform, we didn’t set out to digitise a paper process, we set out to transform how R&D claims are managed because we believe technology isn’t optional in compliance anymore. Managing R&D risk in spreadsheets (retrospectively) and expect to meet audit-ready standards isn’t sufficient anymore. It never was!

Synnch clients, from startups to listed companies, use the platform to map projects, capture contemporaneous evidence, and link everything back to the activities and expenditures that underpin their claims in a structured ,continuous and transparent way. And it’s been here, quietly working, long before these cases hit the headlines.

At the core of our ecosystem is the modularised SynnchApp: the evidence platform where teams capture and manage their day-to-day R&D activity. Recent claims can be uploaded and used as the starting backbone, or everything can be created manually as well. Then there’s a layer in documentation, updates, and test results.

• To be more granular, in Timesheets Module, timesheets are recorded against people, activities, daily weekly or monthly with comments and files.
• The intelligent Evidence Module automatically reviews uploaded material and gives it a relevance score, helping users identify what strengthens a claim and what’s missing.
• The Projects Module lets you build structured project narratives, outlining background research, experimentation, and outcomes in one place.  
• The native Jira integration ensures software and engineering teams can sync their R&D work directly into the platform. With summaries and possibility of time capture to make surenot too much time is wasted in looking for R&D tickets in a big Jira instance.
• Then there’s the Expenditure Module, which connects costs to activities and timesheets and can link directly to Xero for a complete, traceable picture.

The AI Platform: Built for R&D – it’s more than a chat

Separate from the SynnchApp, we created a dedicated SynnchAI platform that helps users and consultants analyse, write, and review claims, safely and privately. Inside that environment sits the SynnchAI Chat: a secure, enclosed R&D chat built on a small language model trained specifically on R&D tax incentive frameworks, not an open LLM.

It runs entirely within a closed instance with all data being hosted on Australian servers. Data never trainsany external model, and your IP is protected and securely hosted in Australia. SynnchAI analyses claim quality, checks evidence sufficiency, and provides practical guidance, like talking to an R&D consultant. It’s especially useful when users need to write summaries, justify hypotheses, or explain experimental outcomes clearly and consistently.

For consultants (or experienced self-lodgers), the SynnchAI platform can go even further: it can generate draft claim narratives directlyfrom your evidence: turning the Framework → Evidence → Analysis process into aclaim draft flow.

That means something like the Careteq situation can’t happen unnoticed, the system assesses the evidence first, and if it’s insufficient, there are warnings before the claimever reaches the ATO.  

There’s also an Expenditure Canvas in the SynnchAI platform, ideal for small to medium claims, that allows to align costs to projects with accuracy and consistency.

Does it still need the human in the loop? Absolutely. Whether that’s a consultant, accountant or a self-lodger, human oversight is essential. But the heavy lifting is done and more importantly, compliance isn’t guessed orreverse-engineered later. If you’re a Synnch User and you want the comfort of an R&D Consultant, we have a marketplace of Tech Enabled R&D consultants ready to support you in our Platform.

Before the Noise

AI is everywhere now. In the last couple of years, everyone seems to be “frankensteining” something together: a new tool, a flashy dashboard, a never-seen-before compliance assistant.

But Synnch has been here long before that noise. Yes, maybe not as polished in the early days, but our conviction hasn’t changed: R&D compliance has to be done the other way around: starting with evidence, not ending with it.  

Careteq is just one more example of why that matters. We’ve spent years refining the platform, testing it with consultants, claimants, and real auditfeedback: not to follow a trend, but to build the best possible R&D system for Australian innovators, one that sees the claimant first.  

The Takeaway

The $2.6 million Careteq case isn’t just an ATO story, it’s a reminder that the cost of poor documentation can dwarf the effort it takes to do it right. R&D incentives are designed to reward innovation, not paperwork. But without evidence, the innovation doesn’t count.

Synnch exists to bridge that gap. We give teams the tools to connect their science with their story, to capture what matters, and to stay audit-ready, automatically.

So before the next compliance cycle begins, ask yourself: If the ATO called tomorrow, could you demonstrate, clearly and confidently, what you claimed and why? Would you be happy and proud what you did and be like: “Look here!” If not and if the pulse goes up slightly or if you’re unsure, it’s time to start with Framework → Evidence → Analysis.

It’s time to start with Synnch.