Can I Claim R&D Tax Incentive as a Business Expense in Australia?
Yes — eligible R&D activities receive a refundable tax offset of 18.5% above the company tax rate for groups under A$20m turnover (effectively 43.5%), or non-refundable 8.5%/16.5% for larger groups. Activities must be registered with AusIndustry.
What Australian Taxation Office (ATO) says
Division 355 ITAA 1997 provides the R&D Tax Incentive. Eligibility requires 'core R&D activities' (experimental, with no known outcome) and 'supporting R&D activities'. Registration with AusIndustry is mandatory before the offset can be claimed in the company tax return.
When you can claim
- Salary of staff conducting eligible R&D
- Contract R&D services from registered RSPs
- Materials consumed in R&D
- Decline in value of plant used for R&D
When you cannot claim
- Activities that don't meet 'core R&D' definition (no technical novelty)
- Routine software upgrades or marketing
- Activities outside Australia (limited exceptions with approval)
- Expenditure not at risk (e.g. paid by customer)
Good to know
Pro tip: Document the R&D hypothesis, experiments and results contemporaneously. AusIndustry audits frequently focus on whether activities were genuinely 'experimental' or just routine engineering.
Related expenses
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