Research & Development Tax Incentives
- Arnold Shields
- Jan 24, 2013
- 3 min read
Updated: May 30
Innovation can be expensive, but the Australian Government wants to reward you for it. If your company undertakes genuine research and development (R&D), you may be eligible for a significant tax offset under the R&D Tax Incentive program.
What Is the R&D Tax Incentive?
The R&D Tax Incentive is a government initiative designed to encourage businesses to invest in innovation. Administered jointly by AusIndustry and the ATO, the incentive offers:
A 45% refundable tax offset for companies with turnover under $20 million
A 40% non-refundable tax offset for companies with turnover above $20 million
This incentive can result in either a reduced tax liability or a cash refund—depending on your company's structure and profitability.
Key Requirements to Claim
To benefit from the R&D Tax Incentive, you must:
Register with AusIndustry each income year you intend to claim
Apply within 10 months of the end of your income year
Claim via your company’s tax return after registering your R&D activities
Applications can be submitted by the company or a registered tax agent.
Who Qualifies as a R&D Entity?
To qualify, the entity must be a body corporate that is either:
Incorporated in Australia; or
Incorporated overseas but a resident for tax purposes in Australia; or
Incorporated overseas, carrying on business through a permanent establishment in Australia under a relevant double tax agreement
Ineligible entities include:
Sole traders, partnerships, and most trusts
Corporate limited partnerships
Income tax-exempt entities
What Are Eligible R&D Activities?
Core R&D Activities
These are experimental activities where the outcome is unknown and must follow scientific methodology. The goal must be to create new knowledge—not merely adapt or apply existing solutions.
Examples of excluded activities:
Market research or product testing
Social sciences or humanities research
Legal, compliance or administration processes
Reproduction of existing commercial products
Internal-use software customisation
Supporting R&D Activities
These are activities directly linked to core R&D efforts. If they produce goods or services or are listed in the exclusions above, they must be undertaken solely to support eligible R&D.
What Can You Claim?
Your company must incur at least $20,000 in eligible R&D expenses to qualify for the offset (unless working with a registered Research Service Provider or CRC).
Claimable costs include:
R&D-related salaries and wages
Decline in value of depreciating assets used in R&D
Costs of materials used in experiments
Contributions to CRC programs
Non-claimable expenses:
Advertising or marketing costs
Legal, audit or tax return preparation fees
Director fees or entertainment
Rent for non-R&D use spaces
Staff costs unrelated to R&D
Acquisition costs of core technology
Less Than $20,000 in R&D Spend?
You may still qualify only if your expenditure is:
Paid to a registered Research Service Provider (RSP); or
A monetary contribution under the CRC program
Let Dolman Bateman Handle It
At Dolman Bateman, we specialise in helping companies successfully register and claim their R&D Tax Incentives. From eligibility assessments to full application and compliance support, we’ll make sure you get the maximum refund without the administrative headache.
Need help? Call us on (02) 9411 5422 and we’ll take care of the rest.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
