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Offset your R&D costs
Overview of the R&D Tax Incentive
The R&D Tax Incentive (R&DTI) is a legislated program which supports you to invest in eligible research and development (R&D) that you might not otherwise conduct by offsetting some of the associated costs.
What do you get?
A tax offset for R&D expenditure of up to $150 million.
Who is this for?
The R&DTI is open to all industry sectors and company sizes. Any company that meets the definition of an R&D entity can apply.
How to calculate your tax offset
The R&D tax offset is determined by your aggregated company turnover.
Companies with turnover of less than $20 million
The refundable R&D tax offset is equal to your corporate tax rate plus an 18.5% premium.
Companies with turnover of $20 million or more
The non-refundable R&D tax offset is equal to your corporate tax rate plus a premium. The premium is calculated based on the notional R&D expenditure as a proportion of total expenditure for the income year.
| Proportion of notional R&D expenditure to total expenditure | Tax offset |
|---|---|
| Up to 2 % of total expenditure | Corporate tax rate + 8.5 % |
| Above 2 % of total expenditure | Corporate tax rate + 16.5 % |
More information on what you may be able to claim under the R&DTI can be found on the Australian Taxation Office’s (ATO) Rates of R&DTI offset page.
When to apply
You must apply to register for the R&DTI within 10 months of the end of the income year in which your R&D activities took place.
Once your activities have been registered, you can lodge the R&D Tax Incentive schedule with your company tax return and claim the benefit through the ATO.
Who administers the program?
The R&DTI is jointly administered by:
- the Department of Industry, Science and Resources (the department), on behalf of Industry Innovation and Science Australia, and
- the ATO.
The department registers R&D activities for the R&DTI. The ATO processes R&DTI expenditure claims.
How the R&DTI works
Planning allows you to determine the objectives of your R&D, the activities that you intend to conduct and what is required to conduct them. The department provides support for planning eligible R&D activities, we recommend:
- attending an information session
- reading the Guide to Interpretation.
You will need to ensure you keep records before, during and after each activity (including records of your associated expenditure). You will need these records if the department or ATO reviews your claims.
If you plan to claim overseas R&D expenditure, you must first have a positive overseas finding.
You may also consider collaborating with a research service provider which can assist with planning and conducting your R&D.
Like the rest of the tax system, the R&DTI is based on self-assessment. This means, before applying to register for the program, you are responsible for assessing that you are:
- an eligible R&D entity
- conducting eligible R&D activities
- claiming eligible R&D expenditure.
If you want assurance that your activities are eligible before registering for the R&DTI, you can apply for an advance finding.
Conduct your R&D activities.
Remember to keep records before, during and after each activity (including records of your associated expenditure). You will need these records if the department or ATO reviews your claims.
Register your eligible activities with the department. You must do this within 10 months of the end of your company’s income year in which the activities took place.
The R&DTI is a self-assessment program. Confirmation of registration by the department does not mean your activities are eligible.
The department and the ATO may review the activities in your claim to ensure they comply with legislation. We may do this at the application stage or after your activities are registered.
After registering for the R&DTI you will be provided with a registration number. To claim your tax offset you must enter your registration number into the R&D Tax Incentive schedule of your company's annual income tax return. You can then lodge your tax return with the ATO. Steps for claiming R&D tax offset covers the process to claim your benefit.
Important considerations
R&D tax transparency reports
The ATO is required by law to publish certain details of entities that claim the R&DTI. More information can be found on the R&D tax transparency reports page.
Taxpayer alerts
The ATO prepares taxpayer alerts to provide a summary of their concerns about new or emerging higher risk tax arrangements or issues. Helping get your R&D claims right covers taxpayer alerts specific to the R&DTI.
Need help?
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