Who qualifies for the R&D tax incentive in Australia?

The R&D Tax Incentive is administered jointly by AusIndustry and the ATO. It provides a tax offset to eligible companies that carry out qualifying research and development activities in Australia.

To qualify, the company must be incorporated in Australia (or a foreign company with a permanent establishment in Australia), have an aggregated turnover under $20 billion, and be carrying out 'core R&D activities'. Core R&D activities must involve experimental activities whose outcomes cannot be determined in advance, based on scientific principles and conducted for the purpose of generating new knowledge. Supporting R&D activities that directly support core activities can also be included.

For companies with turnover under $20 million, the offset is a 43.5% refundable tax offset. This means if the company is in a tax loss position, it can still receive a cash refund equal to 43.5% of eligible R&D expenditure. For companies with turnover of $20 million or more, the offset is non-refundable and set at a premium rate above the company tax rate. Eligible expenditure must be at least $20,000 in the income year (or grouped with other R&D entities if below that threshold). Registration with AusIndustry must be completed within 10 months of the end of the income year.