Eligible R&D activities

To register eligible R&D activities, you need to conduct or plan to conduct at least one core R&D activity. Some activities are excluded from being core R&D activities.

Any supporting R&D activities must directly relate to your core R&D activities. You must specify your activities when you register them for the R&D Tax Incentive.

Determinations set out how the law is interpreted and applied when administering the R&D Tax Incentive program. For you, this could mean certain activities are already assessed as eligible.

Eligible R&D activities may occur over several income years. You may conduct an eligible core R&D activity over more than one year. You may conduct R&D supporting activities in different years to your core R&D activity

To be eligible, you must do the following:

  • Conduct or plan to conduct at least one core R&D activity.
  • Assess that your core R&D activity is not an excluded core R&D activity.
  • Register your core R&D activity.
  • Only register supporting R&D activities that directly relate to a core R&D activity. In some cases, they must also be activities you conduct for the dominant purpose of supporting a core R&D activity.

You may be able to claim an offset for R&D activities conducted overseas but you must have a positive Overseas Finding before you claim.

You can find the legislative definitions of core and supporting R&D activities in sections of 355-25 and 355-30 of the Income Tax Assessment Act 1997.

Guide to Interpretation

We have produced this guide to help you assess whether your R&D is eligible for the R&D Tax Incentive. The content in this guide reflects the way we apply the legislation.

The guide includes further details and examples of requirements for core R&D activities, supporting R&D activities and activities that are excluded.

Guide to Interpretation: Video Presentation

This video presentation explains the legislative requirements of the R&DTI program. It also provides watch points and supporting resources to help you register.

Core R&D activities

Core R&D activities are activities with outcomes that a competent professional can't know or determine in advance, based on current knowledge, information and experience.

The outcomes of core R&D activities can only be determined by applying a systematic progression of work that:

  • is based on principles of established science
  • proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions.

You must conduct them for the purpose of generating new knowledge. Your new knowledge can be in the form of new or improved materials, products, devices, processes or services.

We exclude some types of activities from being core R&D activities. Some of these excluded activities may be eligible as supporting R&D activities if they meet all of the legislative requirements.

You must ensure that any core R&D outcomes can't be known or determined in advance.

You need to assess that a competent professional can’t know or determine the outcome of the core R&D activity:

  • based on knowledge, information or experience that is publicly available or reasonably accessible, anywhere in the world
  • without an experiment as part of a systematic progression of work.

Information that is not reasonably accessible is not available. This may include information that is commercially sensitive and held by a competitor, for example a trade secret.

You'll need to check that knowledge of how to achieve your outcome doesn't exist worldwide.

You may:

  • review scientific, technical or professional literature
  • carry out internet searches
  • conduct patent searches
  • seek advice from an expert or experts.

We expect you to keep evidence of your enquiries.

A relevant competent professional is a person who in their field:

  • has knowledge and experience
  • has qualifications if appropriate or can otherwise act with a reasonable level of skill
  • keeps up to date with developments
  • has access to knowledge and resources around the world including the internet, relevant industry journals or other competent professionals in the field.

Excluded R&D activities

The Income Tax Assessment Act 1997 has excluded some activities from being core R&D activities.

You can't register these activities as core R&D activities.

However, excluded activities may still qualify as supporting R&D activities.

  • Market research, market testing or market development, or sales promotion. This includes consumer surveys.
  • Prospecting, exploring or drilling for minerals or petroleum for the purposes of one or more of the following:
    • discovering deposits
    • determining more precisely the location of deposits
    • determining the size or quality of deposits
  • Management studies or efficiency surveys.
  • Research in social sciences, arts or humanities.
  • Commercial, legal and administrative aspects of patenting, licensing or other activities.
  • Activities associated with complying with statutory requirements. Or standards, including one or more of the following:
    • maintaining national standards
    • calibrating secondary standards
    • routine testing and analysis of materials, components, products, processes, soils, atmospheres and other things.
  • Any activity related to the reproduction of a commercial product or process:
    • by a physical examination of an existing system; or
    • from plans, blueprints, detailed specifications or publically available information.
  • Developing, modifying or customising computer software. Software where the dominant purpose is use by any of the following entities for their internal administration. (including the internal administration of their business functions):
    • the entity or developer for which the software is developed, modified or customised.
    • an entity connected with the developer
    • an affiliate of the developer, or an entity of which the developer is an affiliate.

Supporting R&D activities

Supporting R&D activities are those that directly relate to core R&D activities.

You need to demonstrate how your supporting R&D activity directly relates to a core R&D activity.

We expect you to record what that relationship is when you conduct your activities. You also need to explain what that relationship is when you apply to register your activities.

Whether your supporting R&D activity directly relates to a core R&D activity will depend on your circumstances. We expect you to analyse your specific circumstances and keep records to support your claim.

Activities that don't directly relate to your core R&D activities can't be supporting R&D activities.

Some supporting R&D activities can only be claimed if they are undertaken for the dominant purpose of supporting your core R&D activities. These include activities that:

  • are excluded from being core R&D activities
  • produce goods or services
  • are directly related to producing goods or services.

Activities that don't directly relate to your core R&D activities can't be supporting R&D activities.

Examples of activities that will not usually have a direct relationship to a core R&D activity include those in which you:

  • conduct a literature review or internet search to identify a market niche for a new product
  • clean and maintain equipment that you do not use for an experiment
  • decommission and dismantle equipment that you did not use to conduct experiments.

You may be able to register supporting R&D activities that produce or that directly relate to producing goods or services.

However you must be able to show that you conduct them for the dominant purpose of supporting a core R&D activity.

You must also show that they directly relate to a core R&D activity.

This includes good or services your business provides to another entity. It also includes services another entity provides to your business.

What we mean by 'dominant purpose'

Dominant purpose means your prevailing or most influential purpose. Your main purpose of conducting your activities must be to support a core R&D activity.

Assessing your dominant purpose

To determine your dominant purpose to conduct an activity, you need to consider all of your purposes.

You then need to consider the strength of each purpose and how important it is compared to your other purposes.

Activities that are likely to have the dominant purpose of supporting a core R&D activity include activities that:

  • have no other purpose than to assist or facilitate a core R&D activity
  • support core R&D activities and where the direct commercial benefit is insignificant
  • produce items that you consume, or you expect to consume in your experiment
  • create a component to use in a core R&D activity where it serves no other purpose, such as a part of the experimental apparatus.


R&D Tax Incentive determinations are binding advice about how the law is interpreted and applied in relation to the R&D Tax Incentive program.

If a determination applies to you or your activities, it can reduce the amount of time it takes you to register. We provide a list of available determinations on this page. We anticipate more determinations will be made in the future.

The full title of this determination is: The Industry Research and Development (Clinical Trials) Determination 2022.

Activities that comprise a phase 0, I, II, III, pre-market pilot or pre-market pivotal stage clinical trial for an unapproved therapeutic good are ‘core R&D activities’ for the purpose of the R&D Tax Incentive. Applicants conducting these particular clinical trials only need to show that activities fit within the determination rather than explaining how they meet all of the requirements.

For more information, read the Clinical trials determination guide or view the Notifiable Instrument on the Federal Register of Legislation.

Keeping records as evidence of your R&D activities

We expect you to make records around the time you plan and conduct your activities. These are called contemporaneous records. These records will be the strongest evidence to support your claims when we review your application or registration.

The ATO may also ask for records to show the expenditure you want to claim relates to eligible R&D activities.

Keeping records helps you to:

  • self-assess R&D eligibility
  • meet compliance obligations
  • minimise cost if we conduct a review of your application or registration
  • verify the amount of expenditure incurred on R&D activities.

When you keep records to show how your activities are eligible, we expect to see details of:

  • how you could not know or determine the outcome in advance
  • how your R&D activities follow a systematic progression of work from hypothesis through to experiment, observation, evaluation and logical conclusions
  • how the substantial purpose of conducting the activity was to generate new knowledge.

We also expect you to keep records that show how your supporting activities directly relate to at least one core R&D activity. In certain circumstances we also expect evidence to show that you conduct them for the dominant purpose of supporting a core R&D activity.

Evidence can include written records, videos, oral statements and expert opinions.

Additional guidance material

Guide to Interpretation

pdf · 2.45 MB docx · 1.06 MB

Refreshed Guide to Interpretation - Overview of Changes

pdf · 0.26 MB docx · 0.09 MB

When could scaling-up involve eligible R&D activities

pdf · 1.89 MB

How should companies group R&D activities

pdf · 1.78 MB

Compliance readiness guide on record keeping for the R&D Tax Incentive

pdf · 1.74 MB

What's an Advance Finding

If you would like certainty about whether your R&D activities are eligible before registering, you can apply for an Advance Finding. An Advance Finding is a decision by Industry Innovation and Science Australia about your activities. An Advance Finding will inform you of the eligibility of your planned R&D activities.

You can ask for an Advance Finding for:

  • activities you conduct in your current income year, whether you start or complete them in that year
  • activities you plan to conduct in the subsequent 2 income years.

If you want to apply for an Advance Finding, you must do so before the end of the first year in which you conduct or propose to conduct your activities.

We cannot accept late applications or grant extensions of time to apply for an advance finding under any circumstances.

The Finding Process

When you apply, we'll assess the information you've provided. We'll determine if it demonstrates how your activities meet the definition of eligible core or supporting R&D activities.

Examples of information that you may provide to support eligibility include:

  • how you self-assessed your activities
  • records of how you plan, conduct and evaluate your experiments.

There are 4 possible findings we can make on your activities:

  • Eligible
  • Ineligible
  • Partially eligible
  • We may refuse to make a finding

We’ll provide you with a finding certificate for all instances where we make a finding. This finding certificate will be copied to the ATO. If we refuse to make a finding no certificate will be supplied.

A finding is not a registration. If you apply for an Advance Finding you'll still need to apply to register your R&D activities. However, you do not need to have an Advance Finding to apply for the R&D Tax Incentive.

From June 2021, independent contractors may assist in assessing your advance finding application. Your information remains secure and confidential. The department will make the final decision.

Was this page helpful?