Your eligibility to claim the R&D tax offset will also depend on where you are conducting your R&D activities and, importantly, what those activities are.
Where you are conducting your R&D activities
Generally, only R&D activities conducted in Australia qualify for the R&D tax incentive. However, R&D activities conducted overseas also qualify if Innovation Australia makes a finding that your activities meet the conditions specified in section 28D of the Industry Research and Development Act 1986. More information can be found on AusIndustry's websiteExternal Link.
What R&D activities you are conducting
Your research and development activities must meet certain criteria to be eligible for the R&D tax incentive: they must be classified as either core R&D activities or supporting R&D activities.
Core R&D Activities
Core R&D activities are experimental activities:
- whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that
- is based on principles of established science; and
- proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions
- that are conducted for the purpose of generating new knowledge (including about creating new knowledge or improved materials, products, devices, processes or services).
Some types of activities are specifically excluded from being core R&D activities.
Find out more:
Supporting R&D Activities
A supporting activity is one that is directly related to core R&D activities or, for certain activities, has been undertaken for the dominant purpose of supporting core R&D activities. Activities that must satisfy the dominant purpose requirement are those that produce - or are directly related to producing - goods or services; or are excluded from being core R&D activities.
For more detailed information about core R&D activities and supporting R&D activities, refer to AusIndustry's websiteExternal Link.
Your R&D activities must meet the definition of either 'core R&D activities' or 'supporting R&D activities'.