Quick answer: Running a stormwater or microclimate model to a published method is professional practice — the outcome is determinable in advance, and tuning parameters until the output looks right does not change that. A core R&D activity may exist in the narrower case where a model cannot reproduce a behaviour the decision depends on, where the reason is a technically uncertain question about the physics of that site, and where it can only be settled by a systematic progression of work from hypothesis to experiment, observation and evaluation conducted to generate new knowledge. Missing a performance target is not itself the unknown. The company must assess each activity against the statutory tests and self-assess its own claim.
24 August 2026 — this article describes the current rules. The 2026-27 Federal Budget announced R&DTI changes; the ATO states the measure is not yet law, and industry.gov.au states the changes will apply to income years starting on or after 1 July 2028.
Microclimate models and urban stormwater models are settled tools. You give one a three-dimensional geometry, a surface-property set and a meteorological file and it returns temperatures; you give the other a catchment, a fraction impervious and a rainfall series and it returns flows and pollutant loads. Running one to a published method is engineering assessment — competent, valuable, and generally unlikely to be a core R&D activity on those facts.
The unsettled question sits in the gap between the conditions a model's parameters were chosen for and the place it is now asked to predict — and, in the harder cases, in a physical state that both models depend on and neither represents at the resolution or with the coupled physics the decision needs.
Regulatory and planning boundary
A limit on scope first. This article assesses nothing against a planning control, a development standard or a discharge requirement, and takes no position on whether any product, media specification or software package performs. Assessment against planning and drainage requirements, flood risk determination and heat-health advice are matters for the accredited professionals and consenting authorities you engage. What follows is about one question only: whether a technical outcome was genuinely not knowable in advance.
This piece sits alongside our earlier interview article on greening, rooftop photovoltaics and buildings as a coupled system, which covers the research-trend picture across integrated greening, energy and building systems. This one is narrower: the eligibility test for calibrating and validating urban-heat and water-sensitive-design models against site-specific conditions.
The Statutory Test the Activity Has to Meet, Stated in Full
Under s 355-25(1) of the Income Tax Assessment Act 1997, core R&D activities are experimental activities 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 is based on principles of established science and that proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and 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 (business.gov.au; ITAA 1997). Eligibility is assessed activity by activity.
Surface energy balance, boundary-layer meteorology, soil physics and catchment hydrology supply a deep body of established principle, so the established-science limb is capable of being satisfied here — but it is satisfied by how a particular progression is designed, not by the discipline existing.
Paragraph (f) — Statutory requirements and soils/atmospheres testing
Section 355-25(2)(f) sits close to this work. It excludes "activities associated with complying with statutory requirements or standards", expressly including "routine testing and analysis of materials, components, products, processes, soils, atmospheres and other things". This may be relevant to routine filter-media testing or modelling activities undertaken specifically to satisfy a consent condition, depending on the purpose and circumstances of the activity. The same paragraph names "calibrating secondary standards": metrological calibration of an instrument against a reference, a different operation from fitting a hydrological model's parameters, though the shared word causes confusion.
Two practitioner distinctions then do most of the work, and neither appears in the statute:
Calibration vs parameter selection: The first is between calibration against observed data and parameter selection against a convention: fitting parameters to measurements you took can carry a hypothesis, while choosing parameters so the output reproduces a published coefficient cannot, because the answer was fixed before the work started. Both get called calibration.
Fit vs validation: The second is between a fit and a validation — a model tuned on a dataset and then reported against that same dataset has demonstrated nothing about its predictive adequacy, however good the residuals look.
What tends to distinguish a defensible experimental record is duller than either: acceptance criteria recorded before the measurements, evaluation on data deliberately held out of the fitting, competing physical explanations set up so a measurement can discriminate between them, failed trials kept in the record with the reason they failed, and each measurement traceable to the hypothesis it was taken to test. Tuning parameters until a model matches a dataset, with no physical reasoning about which term is wrong, is a fitting exercise — entirely disciplined, and still short of the established-science and logical-conclusions limbs.
Where the Unknown Actually Sits
1. The stormwater model is usually not calibrated against anything measured
The Water Sensitive Urban Design – Greater Adelaide Region Technical Manual is blunt about the normal position: "Ideally models should be calibrated against local flow data, however in most cases information is not available to achieve this." Where it is not, the manual directs that "the selection and calibration of model input parameters should be based on replicating 'accepted' annual volumetric runoff coefficients" — worked through with an example urban catchment at an AVRC of 0.4 (Stormwater Management Authority SA).
That is a sound convention, but it constrains only annual volume — not the drying trajectory between storms, which determines media moisture when a heat event peaks. The manual notes that effective impervious area shifts with rainfall depth/intensity. Furthermore, continuous series from the Bureau of Meteorology's IFD design rainfalls and Australian Rainfall and Runoff tell you when it rained, but not the soil state through dry spells (antecedent moisture, evapotranspiration, root uptake).
2. The thermal map is not the quantity the model predicts
South Australia's thermal imagery provides 2 m surface temperature data (DEW Urban Heat FAQs; Green Adelaide), but it is land surface temperature, not air temperature or mean radiant temperature.
A microclimate model can be tuned to match a surface thermal raster via compensating errors (e.g., overestimating evaporative flux while underestimating thermal admittance), producing the right skin temperature while predicting air temperature and radiant load 1 m above the pavement completely incorrectly.
3. The state both models depend on and neither resolves
The joining variable is soil moisture in the filter media. Stormwater models lump moisture as a store to be drained; microclimate models typically treat vegetation water status as a static "well-watered" setting. In winter-dominant climates, winter water must sustain summer cooling. On extreme days, transpiration can be limited atmospherically by vapour pressure deficit (stomatal closure) rather than by root-zone water supply, a threshold that no published table provides for local species and media configurations.
A Worked Example (Hypothetical and Illustrative Only)
Invented to show where the boundary falls. It is not a real project, the numbers are illustrative, and it says nothing about whether any actual claim would be accepted.
A metropolitan council is renewing 1.4 km of a residential collector street: 38 passively irrigated street-tree pits fed from kerb inlets, plus six bioretention basins. The capital question is where $2.6 million goes — more inlets and more trees, or deeper submerged zones under the existing tree count. The design report modelled the two outputs separately and they disagreed.
Baseline & targets (recorded October 2025): Baseline: uncalibrated AVRC 0.4 stormwater model (84% TSS, 46% TN reduction) and microclimate model predicting 2.4 K air-temp reduction at 15:00 on a 41 °C day (measured on a pilot street at 0.7 K). Target: one parameter set driving both models, predicting 15:00 pedestrian-level air-temp depression within ±0.4 K on ≥ 8 of 10 held-out hot days (> 38 °C), and annual TN load reduction within ±5 percentage points of flow-weighted measurements.
Held and varied: Held: Ulmus parvifolia, pit geometry (1.8 × 1.2 × 1.0 m), sandy loam media (180 mm/h Ksat), kerb inlets, meteorological forcing mast. Varied: submerged zone depth (0, 150, 300, 450 mm; 2 pits each), rainfall–runoff parameters, and transpiration scheme.
Trials & results:
• Trial 1 (Calibrate microclimate to 2 m thermal raster, Failed): Model matched raster (1.1 K RMSE), but predicted 15:00 air depression remained 2.1 K vs 0.7 K measured. Compensating errors in sensible vs latent fluxes masked pedestrian air temperatures.
• Trial 2 (Refit runoff parameters to 6-min inlet flow, Partial): Annual volume matched within 6%, but model predicted media moisture at 0.19 m³/m³ when probes read 0.08 m³/m³ because it lacked summer tree root-uptake.
• Trial 3 (Test supply-limited cooling hypothesis, Failed): 450 mm submerged pits held moisture > 0.22 m³/m³ all summer, but air-temperature depression differed by only 0.1 K (within ±0.2 K measurement uncertainty). Above 38 °C, sap flow dropped in all pits as VPD exceeded ~4.6 kPa, disproving the supply-limited hypothesis on extreme days.
• Trial 4 (Coupled model with VPD-limited transpiration & root uptake, Target Met): Calibrated on 4 pits (Dec 1–Jan 14); evaluated on 4 held-out pits (Jan 15–Mar 17). Predicted media moisture within 0.03 m³/m³ across all 62 days; 15:00 depression predicted within ±0.3 K on 9 of 10 held-out hot days. Annual TN reduction was 41% (vs 38% measured, within ±5% target).
Engineering consequence: On extreme days, cooling was driven by tree shading (mean radiant temp 17 K lower), so capital was directed to canopy area with a modest 150–200 mm submerged zone.
Candidate boundary: Spans recorded hypothesis/criteria through to held-out evaluation in Trial 4. Streetscape civil works, consent-mandated drainage modelling, routine media testing, and rollout to future streets sit outside, requiring separate supporting-activity analysis under s 355-30.
What Is Generally Unlikely to Be Core on Those Facts
Activity
Why
Running a stormwater quality model to the consenting authority's method for a development application
Documented method applied to a new site; may also be associated with complying with statutory requirements or standards
Selecting rainfall–runoff parameters to reproduce an accepted annual volumetric runoff coefficient where no local flow data exists
The manual states this as the fallback convention; the answer is the accepted coefficient
Sizing a bioretention system from published area-ratio or sizing curves
Applying a published relationship as designed
Reading canopy cover and surface temperature off a state mapping viewer
Interrogating a published dataset
Routine testing of filter media for particle size distribution and hydraulic conductivity against the specification
Routine testing and analysis of soils — s 355-25(2)(f)
Where an RSP Fits
An RSP is a scientific or technical service provider registered in specific fields that a company can engage to conduct R&D activities on its behalf (business.gov.au). On a coupled heat-and-water investigation that work sits upstream of the first sensor: stating what is genuinely unknown, choosing the measurement that discriminates between two competing explanations, deciding which data will be held out before any of it is collected, and setting the instrument resolution the hypothesis needs.
There is also a point that matters for smaller programmes: Eligible R&D expenditure incurred to a registered research service provider may be treated differently where the entity's notional R&D deductions fall below the usual $20,000 threshold, subject to the requirements in s 355-100(2) and the underlying activities satisfying the R&D eligibility tests. And using an RSP does not guarantee eligibility — you still self-assess. In mechanism, where total notional deductions come to less than $20,000, the offset is instead worked out on a substituted base, the first kind of expenditure in it being expenditure incurred to a registered research service provider that is not an associate of the R&D entity, for services within a research field for which the provider is registered (s 355-100(2)). The offset tiers are covered in our article on the refundable and non-refundable offset; see also claiming R&D under $20,000 and R&D Tax Incentive in Adelaide.
Talk to Ignition Research before the pits are built, while the instrumentation can still answer a question rather than record an outcome. As a Registered Research Service Provider at Lot Fourteen in Adelaide, we design and conduct the experimental programme and produce the technical record while the work is happening. We are not a registered tax agent, and we are not your planning, drainage or heat-health assessor: your company self-assesses and remains responsible for its own claim. Get in touch.
Frequently Asked Questions
Q: Is running a stormwater model such as MUSIC an eligible R&D activity?
A: Generally not, as a core R&D activity. Setting up a catchment, applying published fraction-impervious and pollutant parameters, and reporting load reductions against a target applies established methods with an outcome a competent professional can determine in advance. A core activity may exist where the model demonstrably cannot reproduce a measured behaviour that the decision depends on — the moisture state of filter media through a dry season, for instance — and the reason has to be found by a systematic progression of instrumented trials conducted to generate new knowledge. Simply missing a performance target, or tuning parameters until the fit improves, is not that. You self-assess.
Q: Is calibration excluded because s 355-25(2)(f) mentions calibrating?
A: The paragraph excludes activities associated with complying with statutory requirements or standards, and the calibration it names is "calibrating secondary standards" — metrological work referencing an instrument to a standard. Fitting a hydrological or microclimate model's parameters is a different operation that happens to share the word. The exclusion still reaches modelling and testing done to satisfy a consent condition or a standard, so the question is what the activity is for, not what it is called. Assessed on the activity's own facts and the statutory tests.
Q: Why does a microclimate model that matches the aerial thermal imagery still get pedestrian temperature wrong?
A: Because surface temperature is one output of an energy balance with several terms, and more than one combination of terms produces the same skin temperature. Over-predicting evaporative flux from a planted surface and under-predicting sensible flux from the pavement can cancel at the surface and diverge badly a metre above it. The state mapping products also carry their own limits: the imagery is a snapshot at the time of capture, captures are not comparable between years, and canopy overhanging a road is classified as impermeable in the permeability layer.
Q: Does a deeper submerged zone give more summer cooling?
A: Not necessarily, and that is the point at which the question becomes empirical. Extra storage helps only if transpiration on hot afternoons is limited by water supply. Where it is limited instead by vapour pressure deficit — stomata closing under a dry, hot atmosphere regardless of soil water — additional storage buys no cooling and may change nitrogen behaviour in the media. Which limb binds, at what threshold, for a particular species, media and root architecture, is measurable rather than known, and answering it means paired measurement at treatment and control locations rather than a model run.
Sources & Further Reading
legislation.gov.au — Income Tax Assessment Act 1997 — Div 355, incl. ss 355-25, 355-30, 355-35 and 355-100
Department for Environment and Water SA — Water sensitive urban design policy
Green Adelaide — Understanding how we map Adelaide's urban environment
Department for Environment and Water SA — Urban Heat and Tree Mapping Viewer FAQs (PDF)
data.sa.gov.au — Metropolitan Adelaide tree canopy, green spaces and built environment 2022
Bureau of Meteorology — Intensity–Frequency–Duration design rainfalls
Bureau of Meteorology — How were the 2016 design rainfalls estimated?
waterquality.gov.au — Australian guidelines for urban stormwater management (historical guidelines)
Related: urban and regional planning research field · what does not qualify · what an RSP is · claiming R&D under $20,000 · refundable vs non-refundable offset · R&D Tax Incentive in Adelaide · more Insights
This article is general information from a Registered Research Service Provider about the R&D Tax Incentive. It is not tax, legal or financial advice; eligibility depends on your circumstances and you should self-assess and seek your own advice.
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