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Eligible R&D entities

Assess whether your entity is eligible to register R&D activities and claim R&D tax offsets in any given year.

Last updated 22 March 2023

About this guide

This guide will help you work out whether you are an eligible R&D entity, and when R&D activities are conducted for you (or another relevant entity).

When we say 'you' in this guide we are referring to an entity that is working out whether it is eligible to claim the R&D tax incentive.

You can only claim the R&D tax incentive if you are an R&D entity. You are an R&D entity if you are a corporation that is incorporated under any of the following:

  • an Australian law
  • a foreign law, but you are an Australian resident for income tax purposes
  • a foreign law and you are both        
    • a resident of a country with which Australia has a double-tax agreement that includes a definition of 'permanent establishment'
    • carrying on business in Australia through a permanent establishment as defined in the double-tax agreement.

Eligibility for R&D

You are not eligible for the R&D tax incentive if you are:

  • an individual
  • a corporate limited partnership
  • an exempt entity (where your entire income is exempt from income tax).

Trusts are not generally R&D entities, except a body corporate in the capacity of trustee for a public trading trust.

There are special rules to consider if you are a member of a consolidated group or multiple entry consolidated (MEC) group or a partner in a R&D partnership.

For the definition of:

  • 'R&D entity', refer to section 355-35 of the Income Tax Assessment Act 1997 (ITAA 1997)
  • 'Australian law', 'foreign law' and 'Australian resident', refer to section 995-1 of the ITAA 1997.

Further information can be found by referring to Taxation Ruling TR 2018/5 Income tax: central management and control test of residency and Permanent establishments.