R&D Tax Incentive
At a glance
Provides a tax offset for some of a company's cost of doing eligible research and development (R&D) activities by reducing a company's income tax liability. Tax offsets of 43.5% or 38.5% are available for costs incurred on eligible activities depending on a company’s annual aggregated turnover. The 43.5% benefit is a refundable offset.
Who can apply:
At a minimum, applicants must:
- be an incorporated company
- be conducting eligible core R&D activities. These are defined in the legislation as being experiments that are guided by hypotheses and conducted for the purpose of generating new knowledge
- have incurred eligible R&D expenditure or notional deductions of at least $20,000 (unless using a Research Service Provider or a Cooperative Research Centre).
This is a self-assessment programme. Further key eligibility requirements apply.
What is the R&D Tax Incentive?
The R&D Tax Incentive provides a tax benefit to companies to help offset some of the cost of conducting eligible research and development activities.
The R&D Tax Incentive is a self-assessment programme. This means that you are responsible for assessing whether your company and the R&D you are conducting meet the eligibility requirements of the programme. These requirements are determined by legislation.
To apply for the R&D Tax Incentive, you will need to register your eligible R&D with the Department of Industry, Innovation and Science (the department).
You are also responsible for keeping all records and documentation to demonstrate your R&D is eligible as defined in the legislation.
The department (on behalf of Innovation and Science Australia) jointly manages the R&D Tax Incentive with the Australian Taxation Office (ATO). The department manages the registration of R&D activities, and the ATO manages the rules on eligible entities and costs.
To be eligible for the R&D Tax Incentive you must:
- be a company that is liable to pay income tax in Australia.
- conduct at least one activity that meets the legislated definition of a core R&D activity.
- Core R&D activities involve at least one hypothesis guided experiment that is undertaken to generate new knowledge.
- Other non-experimental activities that directly support a core R&D activity may be eligible as supporting R&D activities.
You may claim for some R&D conducted overseas under certain circumstances.
Find out more about the eligibility requirements for the R&D Tax Incentive.
The department may conduct checks that registered activities comply with the law after you have registered. Similarly, the ATO may check if the R&D costs being claimed are eligible after registration.
When can I register for the R&D Tax Incentive?
The deadline for lodging an application to register your eligible R&D is 10 months after the end of your company's income year. This means:
- a company with a standard income period of 1 July 2016 to 30 June 2017 must lodge its registration application with the department by 30 April 2018.
- a company with a non-standard income period of 1 January 2017 to 31 December 2017, must lodge its registration application with the department by 31 October 2018.
After the deadline, an extension of time to register a late application may only be granted if the reason for an extension was not the fault of the company (or its agents and advisors) and not within its control. A company must submit a written request for an extension of time to submit a late application.
You must lodge an application for registration for each year in which your company wishes to claim the R&D Tax Incentive.
Apply to register your R&D through the application form.
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