Research and Development Tax Incentive

Research and development, or R&D,

benefits business, communities and

the broader Australian economy.

R&D creates new knowledge,

technology and processes, and

is important for helping companies

to grow and succeed.

Companies take pride in their R&D.

The Research and Development

Tax Incentive, or R&DTI,

is a way for the Australian Government

to encourage companies to do R&D

by providing a tax offset to conduct R&D

that they might not otherwise conduct

due to risk or uncertain returns.

The R&DTI is an incentive program

that supports your company to invest

more in eligible R&D activities.

For R&D conducted from 1 July 2021,

the R&DTI offers different tax offset

rates depending on your company’s

aggregated turnover.

If your company’s annual aggregated

turnover is less than 20 million,

the refundable offset rate is equal to

your company tax rate plus

a premium of 18.5 per cent

If your company’s annual aggregated

turnover is 20 million dollars or more,

you may receive a non-refundable

offset rate equal to your company

tax rate plus a premium.

The premium has two tiers and

is dependent on the incremental

intensity of your R&D expenditure.

Incremental intensity is measured by

your R&D expenditure as a proportion

of your total expenditure for the year.

For R&D expenditure up to 2 percent

of your total expenditure for the year,

you will receive a premium rate

of 8.5 per cent.

For any additional R&D expenditure

above 2 percent of your total expenditure

for the year, you will receive

a premium rate of 16.5 per cent.

The R&DTI is more than

a financial support program.

Registered Research Service Providers

provide an opportunity to collaborate

with research partners.

The types of R&D that are eligible

are set out in the laws that

underpin the program.

If your R&D activities meet the program

criteria, you can claim the tax offset.

The R&DTI is a self-assessment program.

This means you must determine

if your R&D activities are eligible

according to the legislation before

you apply to register for the program.

You can even check if your R&D

activities are eligible before you conduct

or plan to conduct your R&D activities.

Eligible R&D activities are activities

where the outcome of the R&D can’t

have been known or determined in advance.

Eligible R&D activities are also

carried out in a scientific way,

with the aim of generating new knowledge.

We expect you to keep records to

show that your R&D activities meet

the legal requirements of the program.

You should consider registering

for the R&DTI if:

You’re an incorporated company

You conduct or plan to conduct

at least one activity that meets

the program definition of

a core R&D activity

You have eligible R&D expenditure

greater than 20,000 dollars or

have engaged a registered Research

Service Provider to do your R&D.

For more information on eligibility

and how to apply, visit our website

or call the Department of Industry,

Science, Energy and Resources.