Eligible entities


You're an 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.

You're not an eligible R&D entity if you're:

  • an individual
  • a corporate limited partnership
  • an exempt entity (where your entire income is exempt from income tax)
  • a trust (except for a public trading trust with a corporate trustee).

Find out more about eligible entities from the Australian Tax Office (ATO).

Read the full definition of eligibility in the Income Tax Assessment Act 1997 (ITAA 1997)

Eligible activities


Eligible activities are either core R&D activities or supporting R&D activities as defined in the ITAA 1997. In each year that you intend to register, you must conduct or plan to conduct at least one activity, that meets the definition of a core R&D activity.

You need to self-assess your R&D activities against the legislative requirements.

Self-assessment

It's your responsibility to ensure that your registration and claim for the R&D Tax Incentive are correct.

Learn how to self-assess if your R&D activities are eligible.

Eligible R&D expenditure


Only expenditure incurred on your registered R&D activities can be claimed through the tax offset. Amounts which you can claim under the program are called eligible notional deductions.

You need to self-assess if your expenditure is eligible under the program before claiming through your company tax return with the ATO.

Learn more about eligible notional deductions from the ATO.

Read the Tax Alert 2017/3 – Claiming the Research and Development Tax Incentive for ordinary business activities.

You must spend at least $20,000 on eligible R&D

To be eligible for a tax offset your notional deductions for an income year, must be at least $20,000.

If your eligible R&D expenditure is less than $20,000, you can still apply for the offset. However, you must use a registered Research Service Provider (RSP) to conduct your R&D.

A public register of RSPs is published each year in our Annual Report.

The public register provides:

  • details of the RSPs
  • the fields of research in which each RSP registers
  • contact details for each RSP.

We register and publish a list RSPs and their field of research. Using a RSP to perform your R&D can provide opportunities to collaborate with partners within your area of research.

Learn how an RSP can help you conduct eligible R&D activities and where to find one.

A $150 million threshold on R&D claims

For eligible R&D activities conducted on and from 1 July 2021 there's a threshold of $150 million on R&D Tax Incentive claims.

For eligible R&D expenditure exceeding $150 million in your income year, the tax offset is equal to your company tax rate. This means you may not get any further tax benefit for amounts over $150 million.