R&D Tax Credits — Australia
The R&D Tax Incentive, substantiated properly
The R&D Tax Incentive (R&DTI) is Australia's principal mechanism for supporting business investment in research and development, jointly administered by AusIndustry (Department of Industry, Science and Resources) and the ATO. Getting a claim right requires both a registration process with AusIndustry and a tax offset claim with the ATO — and a technical description of the R&D that a technically literate assessor, not a generic template, actually wrote.
Assess your eligibilityWhat the R&D Tax Incentive is
The R&DTI operates as a dual-agency program: AusIndustry assesses and registers the R&D activities themselves, while the ATO administers the tax offset claimed against those registered activities. Both steps are required — registration alone does not produce a tax benefit, and the ATO offset cannot be claimed without a valid registration.
[verify: current administrative detail on how AusIndustry and ATO coordinate assessment, given periodic program changes]
Core vs. supporting R&D activities
Core R&D activities
Experimental activities whose outcome cannot be known or determined in advance on the basis of current knowledge, information, or experience, conducted for the purpose of generating new knowledge, and based on principles of established science, proceeding from hypothesis to experiment, observation, and evaluation, leading to logical conclusions.
Supporting R&D activities
Activities directly related to core R&D activities, or (where they produce goods/services, or are excluded activities) undertaken for the dominant purpose of supporting core R&D activities. Supporting activities can't stand alone — they only qualify by their relationship to registered core activities.
Refundable vs. non-refundable offsets
Which offset applies turns on your aggregated turnover. Below the threshold, eligible entities generally receive a refundable tax offset — valuable for companies not yet in a tax-paying position. At or above the threshold, the offset is non-refundable but can typically be carried forward.
[verify: current aggregated turnover threshold distinguishing refundable from non-refundable offset eligibility]
[verify: current refundable and non-refundable offset rates, and the R&D expenditure threshold ($150M notional deduction cap or successor figure) above which the offset rate may step down]
Registration deadline
Core and supporting R&D activities must be registered with AusIndustry within a fixed window after the end of the company's income year — this is a hard deadline, not a guideline, and a late registration is not accepted absent a specific extension.
[verify: current registration deadline — number of months after the end of the income year]
Record-keeping and contemporaneous documentation
AusIndustry and the ATO expect contemporaneous records connecting the hypothesis being tested, the experiments run, the results observed, and the expenditure incurred — assembled as the work happens, not reconstructed at registration time. This is consistently where R&DTI claims are won or lost on review.
Interaction with other government grants
Where R&D expenditure is also funded by another government grant or program, that portion generally cannot be double-counted in the R&DTI claim — the interaction rules depend on the specific grant. [verify: current double-dipping / grant-offset rules for the specific programs a client has received]
FAQ
Frequently asked questions
- Do we register with AusIndustry or claim with the ATO first?
- Registration with AusIndustry comes first — it's a prerequisite for claiming the tax offset with the ATO. The two steps are administered separately but both are required for a valid claim.
- What's the practical difference between core and supporting R&D activities?
- Core activities are the genuine experimental work resolving technical uncertainty. Supporting activities are everything necessary to enable that work — but they only qualify by being directly related to registered core activities, so the core activities have to be correctly identified first.
- Are we eligible for a refund, or just a reduction in tax payable?
- It depends on your aggregated turnover against the current threshold. [verify: current threshold] determines whether you receive a refundable offset (cash back, useful pre-revenue) or a non-refundable offset (carried forward against future tax).
- What happens if we miss the registration deadline?
- Late registration is not accepted as a matter of course — extensions are granted only in limited circumstances by AusIndustry. This is one of the least forgiving deadlines in the program, so we treat it as a hard date from the start of an engagement.
- Can software development qualify as core R&D?
- Yes, where it involves genuine technical uncertainty resolved through a systematic experimental process — but routine software development, debugging, and adaptation of existing techniques typically do not qualify on their own.
- If we've already received a government grant for this project, can we still claim the R&DTI?
- Possibly, but the same expenditure generally cannot be claimed twice. [verify: current interaction rules for the specific grant program involved] — this needs to be checked against the specific grant.
Sources
This information is general in nature and does not constitute tax advice. R&D tax incentive rules change and eligibility depends on individual circumstances. Speak to us or a qualified tax adviser before acting.
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