Research And Development (R&D) Tax Incentive

Companies may claim a tax offset for some of its costs 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.

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).


In the 2018-19 Federal Budget, the Government announced reforms to the Research and Development Tax Incentive (R&DTI) to reward additional investment in R&D while also ensuring the integrity and fiscal affordability of the R&DTI.

From a compliance perspective, it is necessary to have systems to track the time and costs of personnel involved in R&D activities and software that computes the amount of the R&D concession based on this information.