R&D Tax Incentive (R&DTI)

About this programme

The R&D Tax Incentive (R&DTI) is Australia's broad-based, self-assessment tax offset for companies that carry out eligible research and development. It offsets some of the cost of R&D a company might not otherwise undertake, rather than paying out a grant up front.

The programme is jointly run by two agencies with separate jobs: the Department of Industry, Science and Resources (via AusIndustry) registers a company's R&D activities each year, and the Australian Taxation Office (ATO) processes the resulting tax offset claim on the company's income tax return.

It is open to companies of any size and any industry sector, provided the company is an eligible R&D entity and the work it registers meets the legislated definitions of core and supporting R&D activities. Because it runs on self-assessment, the company decides what to register — but the department and the ATO can review that self-assessment at registration or afterwards.

How it works

The offset rate depends on the company's aggregated turnover. Companies with turnover under $20 million get a refundable tax offset equal to their corporate tax rate plus an 18.5% premium — refundable means it can produce a cash refund even if the company is not yet in profit.

Companies with turnover of $20 million or more get a non-refundable offset instead, tiered by R&D intensity: corporate tax rate plus 8.5% on R&D expenditure up to 2% of total company expenditure, and corporate tax rate plus 16.5% on the portion above that 2% threshold.

The maximum R&D expenditure a company can claim the offset against in an income year is $150 million; spending above that reverts to the normal company tax deduction rate.

The claim cycle runs in two steps each year: first register the R&D activities with the department (AusIndustry) within 10 months of the end of the income year in which the activities were conducted, then claim the offset by lodging the R&D Tax Incentive schedule with the ATO as part of the company tax return, quoting the registration number the department issues.

Who can apply

To register, a company must be an "eligible R&D entity" — a corporation incorporated under Australian law, or a foreign-incorporated company that is an Australian tax resident, or a foreign-incorporated company that is a resident of a country with an Australian double tax agreement and carries on business in Australia through a permanent establishment.

The company must have conducted, or plan to conduct, at least one eligible core R&D activity: work carried out for the purpose of generating new knowledge, where the outcome cannot be known or determined in advance and can only be worked out by following a systematic progression of work (hypothesis, experiment, observation, evaluation, conclusion). Supporting R&D activities — work directly related to a core activity — can also be registered, but must be identified separately from core activities, not grouped in with them.

A company generally needs to have spent at least $20,000 on eligible R&D in the income year to register, unless the expenditure is on services from a registered research service provider or a contribution to the Cooperative Research Centres Program, in which case the $20,000 floor does not apply.

Tobacco and gambling-related activities are excluded from the programme, other than activities conducted solely for harm minimisation purposes. Other specific activity exclusions are set out in the legislation and the department's eligibility guidance.

Companies planning R&D expenditure outside Australia need an overseas finding covering that expenditure before they can claim it — this is a separate application to the core registration.

How to apply

1. Confirm the company is an eligible R&D entity and that the planned or completed work meets the core/supporting R&D activity definitions before applying.
2. Keep contemporaneous records while the R&D is being carried out — evidence of the work done, the systematic progression followed for core activities, and how any supporting activities relate to the core activities — since these must be produced on request.
3. If claiming overseas R&D expenditure, apply for an overseas finding covering that expenditure.
4. Register the year's R&D activities through the R&DTI customer portal at incentives.business.gov.au within 10 months of the end of the company's income year. Access to the portal depends on the applicant's role — principal authority, staff, tax agent, or consultancy — each with its own authorisation step.
5. Complete the registration application, listing core and supporting activities separately with the technical detail the form asks for.
6. Once registered, the department issues a registration number. Enter that number in the R&D Tax Incentive schedule lodged with the company's income tax return to claim the offset from the ATO.
7. Note that registration confirms the application was accepted, not that the activities are eligible — the self-assessment can still be reviewed by the department or the ATO after the fact.

Documents you’ll typically need

• Contemporaneous records showing the R&D activities were actually conducted
• Evidence of the systematic progression of work followed for each core activity (hypothesis, experiment, observation, evaluation, conclusion)
• A clear explanation of how each supporting activity relates to its core activity
• An overseas finding, where any of the claimed expenditure was incurred outside Australia
• The R&D Tax Incentive schedule, lodged with the company income tax return, quoting the registration number

Frequently asked

Reviewed 2026-08-16. Programmes change — confirm current eligibility, amounts and deadlines on the official page before you apply. CapEasy is a private consultancy and is not affiliated with any government authority.