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ASX listed healthcare company provides update on R&D Tax Dispute

In May 2025, Careteq Limited (ASX: CTQ) a clinical healthtech company specialising in medication management and clinical governance solutions announced details of a disputed R&D claim.

The May 2025 announcement noted that Careteq:

• ‘advises that it has been issued with amended assessments from the Australian Taxation Office (ATO) in relation to claims made under the Australian government’s Research and Development Research and Development Tax Incentive (R&D Tax Incentive) for the financial years ended 30 June 2021, 2022 and 2023 (Amended Assessments). The Amended Assessments require the repayment of previously received R&D Tax Incentive reunds along with associated interest.
• The Company, supported by its legal advisers, strongly disputes the Amended Assessments and intends to lodge a formal objection with the ATO within the prescribed 60 day period.
  Careteq has always participated in the Australia’s R&D Tax Incentive program, a crucial initiative designed to encourage innovation and investment in research and development (R&D) activities across Australia. 
• The Company has, at all times, sought to comply with all legislative requirements and guidelines in preparing its R&D Tax Incentive claims.
• The Amended Assessments follow a review by the ATO of Careteq’s R&D Tax Incentive claims for the financial years specified above. While the specific grounds for the ATO’s adjustments are being thoroughly reviewed with Careteq’s tax and legal advisors, they generally relate to the ATO’s re-evaluation of the eligibility of certain R&D activities and associated expenditure. This aligns with the ATO’s recently intensified focus on R&D Tax Incentive compliance. The total amount sought by the ATO comprises the repayment of R&D Tax Incentive refunds of $2,615,277.43 and interest of $340,945.52.
• Careteq maintains its strong conviction in the eligibility of its R&D activities for the R&D Tax Incentive scheme and the validity of its R&D Tax Incentive claims for the periods in question. The Company considers that it has always acted in good faith, relying on professional advice and maintaining what it believes to be robust documentation to substantiate its R&D expenditure. Accordingly, the Board has resolved to formally object to the Amended Assessments. This objection will be lodged with the ATO within the 60-day statutory timeframe. The objection process involves an independent internal review by the ATO objections team.’

A further update on the dispute was published in September 2025 within the company’s annual report which noted:

• ‘the Australian Taxation Office (ATO) has expressed the view in the Position Paper that Careteq Limited has not provided evidence of adequate substantiation for the expenditure incurred for the R&D activities and has not demonstrated the nexus between the expenditure and the R&D activities for the purposes of Division 355 of the Income Tax Assessment Act 1997. Accordingly, the R&D Tax Incentives for the 2021, 2022, 2023 and 2024 financial years have been disclosed as contingent liabilities.
• Careteq Limited received an audit position paper (Position Paper) from the Australian Taxation Office (ATO). The Position Paper relates to Careteq’s R&D tax incentive claims for the years ended 30 June 2021;30 June 2022 and 30 June 2023. Careteq Limited, with the assistance of R&D tax experts, made further technical and factual submissions in relation to the Position Paper on 30 May 2024. The submission included the R&D tax incentive claims for the years ended 30 June 2021, 30 June 2022 and 30 June 2023. 
• The ATO issued amended assessments in late May 2025 in relation to claims made under the Australian government’s Research and Development Tax Incentive (R&D Tax Incentive) for the financial years ended 30 June 2021, 30 June 2022 and 30 June 2023. The amended assessments follow a review by the ATO of Careteq’s R&D Tax Incentive claims for the financial years specified above. While the specific grounds for the ATO’s adjustments are being thoroughly reviewed with Careteq’s tax and legal advisors, they generally relate to the ATO’s re-evaluation of the eligibility of certain R&D activities and associated expenditure. This aligns with the ATO’s recently intensified focus on R&D Tax Incentive compliance. The total amount sought by the ATO comprises the repayment of R&D Tax Incentive refunds of $2.6 million, penalties of $0.65 million and interest of $0.34 million. 
• Careteq maintains its strong conviction in the eligibility of its R&D activities for the R&D Tax Incentive scheme and the validity of its R&D Tax Incentive claims for the periods in question. The Company considers that it has always acted in good faith, relying on professional advice and maintaining what it believes to be robust documentation to substantiate its R&D expenditure. The company has lodged formal objections with the tax office in relation to these amended assessments, the objection process involves an independent internal review by the ATO objections team.’
• ‘Should the objection be unsuccessful, Careteq will consider seeking further external review of the ATO’s decision. For the year ended 30 June 2024 the group recognised an R&D tax incentive claim of $0.6 million and further for the year ended 30 June 2025 the group recognised an R&D tax incentive claim of $0.6 million, these claims have yet to be lodged, the ATO may form a view that we are not entitled to these claims. Careteq limited believes that the response provided evidence of adequate substantiation of the expenditure incurred on R&D activities and that it has adequately demonstrated the nexus between the expenditure and the R&D activities.’  

Swanson Reed has no knowledge of this matter other than what has been announced in the company’s ASX filings.

This is a reminder that R&D Claims must be compiled and assessed with care, and that claimants should carefully adhere to R&D Tax Compliance guidance published by AusIndustry and the ATO.

Please get in touch with our office if you require assistance, would like to speak to someone about a potential claim, or check out our website for more information.