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Check if you are eligible for the R&D Tax Incentive
What does self-assessment mean?
Like the rest of the tax system, the R&DTI is based on self-assessment. This means you are responsible for ensuring you and your R&D activities are eligible before applying for the program.
Full eligibility definitions for the R&DTI are outlined in section 355 of the Income Tax Assessment Act 1997 (ITAA).
Eligible entities
Before assessing the eligibility of your R&D activities, you should first determine whether you are an eligible R&D entity.
You are an eligible R&D entity if you are a corporation that is any of the following:
- incorporated under an Australian law
- incorporated under a foreign law but an Australian resident for income tax purposes
- incorporated under a foreign law and you are both:
- a resident of a country with which Australia has a double tax agreement that includes a definition of 'permanent establishment'
- carrying on business in Australia through a permanent establishment as defined in the double tax agreement.
Decisions about the eligibility of entities for the R&DTI are made by the Australian Taxation Office (ATO). Further detail (including information about consolidated or multiple entry consolidated groups) is available on the ATO's Eligibility for R&D tax offsets page.
Eligible activities
Your R&D activities are eligible if they are either core R&D activities or directly related to core R&D activities (supporting R&D activities).
Some R&D activities are excluded from the R&DTI program. R&D activities relating to tobacco and gambling are ineligible for income years starting on or after 1 July 2025, unless they are conducted for the sole purpose of harm minimisation.
You may be able to claim the R&D tax offset for activities conducted overseas but you must have a positive overseas finding in place before you claim.
Decisions about the eligibility of activities for the R&DTI are made by the Department of Industry, Science and Resources (the department).
Core R&D activities
Core R&D activities are experimental activities that are conducted to generate new knowledge (such as new or improved materials, products, processes or services) where the outcome:
- cannot be known or determined in advance, and
- can only be determined by applying a systematic progression of work (hypothesis, experiment, observation, evaluation, logical conclusions).
However, activities related to tobacco or gambling can only be eligible as core R&D activities if they are conducted for the sole purpose of harm minimisation.
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Find further information on the requirements of core R&D activities and how to meet them.
Conducting core R&D activities for the R&D Tax Incentive
Supporting R&D activities
Supporting R&D activities are activities that are directly related to a core R&D activity.
Some activities will need to fulfill an additional requirement before they can be supporting R&D activities. If your activity (except if related to gambling or tobacco):
- is excluded from being a core R&D activity, or
- produces or directly relates to producing goods or services
then it will need to be conducted for the dominant purpose of supporting a core R&D activity.
Activities related to tobacco or gambling can only be eligible as supporting R&D activities if they are conducted for the sole purpose of harm minimisation.
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Find further information on the requirements of specific supporting R&D activities and how to meet them.
Conducting supporting R&D activities for the R&D Tax Incentive
Excluded R&D activities
Certain activities are excluded from being registered under the R&DTI.
Some excluded core R&D activities may still qualify as supporting R&D activities if they are:
- directly related to an eligible core R&D activity, and
- conducted for the dominant purpose of supporting that core R&D activity.
Activities related to gambling and tobacco can only qualify if they are conducted for the sole purpose of harm minimisation.
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Find a full list of excluded activities and information on how some of them may still be eligible.
Excluded R&D activities under the R&D Tax Incentive
While R&D is often described in terms of projects, the R&DTI program only applies to eligible core or supporting R&D activities.
R&D activities may occur within the broader context of a project. However, under the R&DTI, eligibility is determined at the activity level, not the project level.
When applying for the R&DTI, you must describe your R&D activities in terms of the legislative requirements set out in section 355 of the ITAA, rather than describing them as projects.
Eligible R&D expenditure
You can only claim expenditure incurred on R&D activities which are eligible and have been registered by the department.
You need to self-assess if your expenditure is eligible before claiming it through your company tax return with the ATO.
More information can be found on the ATO’s Amounts you can claim page.
You must spend at least $20,000 on eligible R&D
To be eligible for a tax offset under the R&DTI, the R&D expenditure for your income year must be at least $20,000. This expenditure threshold does not apply if you use a research service provider to conduct your R&D or if you contribute to the Cooperative Research Centres Program.
A public register of RSPs is published each year in our Annual Report.
$150 million threshold on R&D claims
The maximum amount you can claim as expenditure in a single income year for eligible R&D activities is $150 million. For R&D expenditure exceeding $150 million, the tax offset is equal to your company tax rate – meaning you may not get any further tax benefit.
More information can be found on the ATO’s Rates of R&DTI offset page.
Assuring eligibility
If you would like certainty about whether your R&D activities are eligible before applying for the R&DTI, you can ask the department to make a legally binding decision called an advance finding.