• About the program

    The Research and development (R&D) tax incentive replaced the R&D tax concession from 1 July 2011. It provides targeted R&D tax offsets designed to encourage more companies to engage in R&D. The incentive has two core components. Entities engaged in R&D may be eligible for:

    • a 43.5% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million per annum, provided they are not controlled by income tax exempt entities
    • a 38.5% non-refundable tax offset for all other eligible entities (entities may be able to carry forward unused offset amounts to future income years).

    The rate of the R&D tax offset is reduced to the company tax rate for that portion of an entity's notional R&D deductions that exceed $100 million for an income year. This change applies to assessments for income years starting on or after 1 July 2014 and before 1 July 2024.

    The R&D tax incentive aims to boost competitiveness and improve productivity across the Australian economy by:

    • encouraging industry to conduct R&D that may not otherwise have been conducted
    • improving the incentive for smaller firms to undertake R&D.
    • providing business with more predictable, less complex support

    The ATO and AusIndustry (on behalf of Innovation Australia) jointly administer the R&D tax incentive. Your R&D activities must be registered with AusIndustryExternal Link before the tax offset is claimed, and we determine if the expenditure claimed in your tax return for your R&D activities is eligible for the tax offset.

    See also:

    Last modified: 25 Oct 2016QC 24590