The Research and Development Tax Incentive – 2023 Overview

R&DTI – What is it about?

The Research and Development Tax Incentive (R&DTI) offers companies offsetting eligible R&D activities costs. It was developed to encourage companies to innovate and grow, benefiting the Australian economy.

Who can claim R&DTI?

The R&D Tax Incentive is only available to companies incorporated in Australia. Companies also need to be registered with AusIndustry within 10 months of the end of financial year. Trusts and Trustee companies are not eligible.

What is the benefit of the Research and Development Tax Incentive?

For companies with a group turnover of less than $20m, the offset is the company tax rate plus 18.5 percentage points – 43.5% for a base rate entity paying 25%. It is refundable, so a company in losses receives it as cash rather than carrying it forward.

For companies at $20m or more, the offset is non-refundable and depends on R&D intensity – R&D spending as a proportion of total expenditure. Up to and including 2% intensity it is the company tax rate plus 8.5 points; above 2%, plus 16.5 points.

Notional deductions are capped at $150 million in an income year, and there is a $20,000 minimum spend, except where the expenditure goes to a registered Research Service Provider, which is not subject to that minimum.

Tobacco and gambling activities are now excluded

From income years starting on or after 1 July 2025, activities relating to gambling or gambling-like practices, tobacco, tobacco products, vaping goods and certain nicotine goods generally cannot be core or supporting R&D activities. A narrow exception applies where the activity is solely for a specified harm-minimisation purpose.

This reaches further than the obvious operators – software, data analytics and platform businesses working in those supply chains are caught too – and there is no grandfathering for projects that began before it was announced. If any part of your R&D touches those areas, get advice before you register.

What are eligible activities for R&DTI?

Core R&D activities are defined as:

Experimental activities – whose outcome cannot be determined in advance, based on principles of established science proceeding from hypothesis to experimentation, evaluation and logical conclusion and conducted for the purpose of generating new knowledge including new or improved products, processes, materials, devices or services;

Supporting R&D activities are directly related to Core R&D activities – directly related activities have a direct, close and relatively immediate relationship with the experimental activities, supporting activities are not experimental but are necessary for undertaking the project/activity e.g. travel to a conference, background research, regular tests, discussions with suppliers and Dominant Purpose test applies for activities that produce goods or services or activities on the ‘R&D excluded’ list.

How to apply for R&DTI?

Application can only be submitted through the R&DTI Customer Portal. To access the portal, the applicant needs to have a myGovID account and link to the company’s ABN using the ATO’s Relationship Authorisation Manager.

If you have questions

If you need a professional support with your R&DTI, you can book your consultation with BTMH. The registration deadline is a rule rather than a fixed date: ten months after the end of your income year, which for a 30 June balancer means 30 April. Registrations for the year ended 30 June 2026 are due by 30 April 2027.

An extension can be requested through the R&DTI customer portal, and a request of 14 days or less made before the deadline is approved. The statutory maximum extension is 92 days past the deadline. Late applications for advance findings and overseas findings cannot be accepted at all, so those need planning well ahead.

The 2026-27 Budget announced a redesign of the incentive – a higher core rate, supporting activities removed, and different turnover and intensity thresholds. None of it is law, draft legislation is expected in 2027, and the proposed start is 1 July 2028. The rates above are what applies to the year you are registering now.