Section 355.25 of the Income Tax Assessment Act 1997 provides:

Core R&D activities are experimental activities:

(a) whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:

(i) is based on principles of established science; and

(ii) proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and

(b) that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).”

As I understand it and for an activity to be eligible, it must satisfy subclause (a)(i) and (ii), and (b), and not belonged to activities in subclause (2).

Subclause (a)(i) requires the activity to be based on principle of established science, hence onus is on one to show the ATO that what we are doing is an established science.

Subclause (a)(ii), for me, is the easy to satisfy based on what we do here in that we proceed from a hypothesis to experiment (testing and live trading), observation and evaluation (trade management), and leads to logical conclusion (profitable live trading).

Subclause (b) appears to be difficult to satisfy, at least for me, in that it requires an activity that are conducted for the purpose of generating new knowledge. The keyword is new knowledge. Unless, one created a new indicator or processes, it will be difficult to comply.

Just my two cents, and best is to speak with a lawyer with extensive experience and/or knowledge in tax law (I do not think tax accountant would be able to help as this relates to interpreting law and search for precedents) or search for ATO rulings relating to what we do here. Another way of going about it is to put your case to ATO and have them assess it and come out with a ruling, which may cost you abit.