Praelexis

Overview

Praelexis is an artificial intelligence and machine learning specialist applying advanced technologies to complex problems across industries.

Since 2023, Catalyst Solutions has worked with Praelexis to assess its projects against the requirements of the Income Tax Act, identify which projects meet the qualifying criteria, prepare the detailed technical motivations and calculate the associated qualifying expenditure. This integrated approach combines technical, financial and legislative expertise to maximise the available tax benefit while maintaining a compliance-first approach to each submission.

The partnership has led to two approved R&D projects and over R700,000 in additional tax benefit.

The R&D Projects

The breadth of Praelexis’ R&D is demonstrated by two highly specialised projects applying AI and machine learning to very different technological challenges.

The first project, Federisk, involves the development of a decentralised machine learning solution capable of identifying financial crime across multiple financial institutions while preserving the privacy of each institution’s underlying data. The work involves federated learning, privacy-preserving technologies, fragmented legacy data structures and machine learning models capable of operating across institutional boundaries. 

The second project, the Radiological Image Analysis project, applies AI to an entirely different field. Praelexis is investigating whether previously unavailable indicators can be extracted from ultrasound and Doppler imagery to improve predictions of endometrial receptivity, IVF success and the optimal implantation window. 

Although very different in application, both projects go beyond the application of existing technology and involve technological uncertainties that require systematic investigation and experimentation. 

The Challenge

The technical complexity and breadth of Praelexis’ work meant that a conventional tax-led approach would not be enough.

Praelexis needed a partner with the technical depth to understand highly specialised software and AI development, and to determine which activities met the requirements of Section 11D. This is particularly important in the software sector, where innovative or technically demanding development does not automatically qualify for the incentive.

Beyond technical depth, the right partner needed strong legislative and financial expertise: the ability to interpret the requirements of the Income Tax Act, calculate qualifying expenditure accurately and identify the full available tax benefit, while managing the process without creating an unnecessary administrative burden for the Praelexis team.

At the same time, Praelexis could not afford for the R&D tax process to divert significant time and attention away from the underlying development work. Any claim activity needed to be managed efficiently, with internal input focused only where it was necessary to evidence the R&D.

The Partnership

Complex software and AI projects often sit in a grey area when it comes to Section 11D. Sophisticated technology alone is not enough to qualify, and determining where eligible R&D begins and ends requires both technical depth and a strong understanding of the legislation.

Catalyst Solutions assessed Praelexis’ wider development portfolio against the requirements of Section 11D and progressed only the projects that met the qualifying criteria. The assessment drew on deep technical expertise in software and AI, allowing the team to distinguish qualifying R&D from work that, while innovative or technically demanding, did not meet the required threshold.

For Praelexis, this meant valuable internal time and resources were concentrated on the projects with a strong basis for approval, rather than being spent pursuing applications that were unlikely to qualify.

Catalyst Solutions’ technical expertise was supported by strong financial and legislative knowledge, giving Praelexis an expert-led approach across the full R&D tax process. Catalyst Solutions took on the technical, financial and administrative heavy lifting, while keeping the Praelexis team informed and focusing their involvement on the specialist knowledge and evidence only they could provide.

This reduced the administrative burden on Praelexis and allowed its team to remain focused on progressing the R&D itself, while Catalyst Solutions managed the complexity of the claim around them.

The Outcome

Both R&D projects submitted under Section 11D received approval, delivering over R700,000 in additional tax benefit for Praelexis.

Beyond the immediate financial benefit, the tax relief reduces the effective cost of Praelexis’ R&D investment, allowing more capital to remain in the business to support continued development and innovation.

As Praelexis continues to develop advanced AI and machine learning solutions, its partnership with Catalyst Solutions provides the technical, legislative and financial expertise needed to assess new R&D as it emerges, identify qualifying projects early and continue pursuing the available tax benefit through a compliance-first approach.