This track is for founders and early finance hires of an Australian company that is loss-making or pre-revenue and is deciding whether, when and how to claim the R&D Tax Incentive. Australia answers the program's first question well for most startups: companies with aggregated turnover under A$20 million receive a refundable offset of the corporate tax rate plus an 18.5% premium, so a base rate entity taxed at 25 percent receives 43.5 percent of its notional deductions as cash even in a loss year. The incentive is jointly administered by the Department of Industry, Science and Resources and the Australian Taxation Office, and activities must be registered with the department within 10 months of the end of the income year before the offset can be claimed in the company tax return.
How the Australia rules change the program
| Module | What is different in Australia | Country page |
|---|---|---|
| Is it worth claiming | Refundable offset: corporate tax rate plus an 18.5% premium, for aggregated turnover under A$20 million. Non-refundable offset: corporate tax rate plus 8.5% (R&D intensity up to 2%) or 16.5% (above 2%), for aggregated turnover of A$20 million or more. You must spend at least A$20,000 on eligible R&D in the income year, unless you use a research service provider or contribute to the Cooperative Research Centres Program. | Refundable vs non-refundable |
| Setting up from day one | Registration is annual and is of activities, not projects: the form requires for each core activity the new knowledge intended, the existing knowledge and sources investigated, the hypothesis, the experiment, how results were observed and evaluated, the conclusions, the dates and the estimated expenditure. | Registration with AusIndustry |
| Funding interactions | Where an R&D entity receives a recoupment from an Australian government agency for expenditure on which it has claimed the R&D tax offset, a clawback adjustment includes in assessable income an amount calculated so as to remove the premium benefit of the offset on the recouped expenditure. Expenditure is not eligible where the R&D activities are conducted to a significant extent for another entity, or where another entity bears the financial risk and effectively owns the results. | Associates and feedstock |
| Your first claim | Register R&D activities with the department within 10 months of the end of the income year, then claim the offset in the company tax return by completing the R&D tax incentive schedule. | How to claim |
Forms and deadlines
| Form or step | Deadline or timing | Country page |
|---|---|---|
| Advance or Overseas Finding application | Before the end of the income year in which the activities are conducted. | Advance and overseas findings |
| Registration of R&D activities (R&D Tax Incentive customer portal) | Within 10 months of the end of the income year, for each income year including continuing activities. The department may extend the registration deadline in limited circumstances; late applications without an extension are refused. | Registration with AusIndustry |
| Company tax return with the R&D tax incentive schedule | Due by 31 October for self-lodgers or by the tax agent lodgement program dates, up to 15 May of the following year. | Deadlines |
Key rules to know
What a core activity is. A core R&D activity is an experimental activity 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. A registration must include at least one core R&D activity.
Founders and associates. Salary expenditure must be apportioned on a reasonable basis between R&D and non-R&D activities, and the ATO expects contemporaneous records such as timesheets. Expenditure incurred to an associate is notionally deductible only when it is paid. Associate covers related companies, controlling shareholders, directors and their relatives and entities they control, including a founder's own service company.
Customer-funded work. Expenditure is not notionally deductible to the extent the R&D entity could reasonably be expected to receive consideration as a direct or indirect result of incurring it, regardless of the results of the activities. Aggregated turnover includes the annual turnover of connected entities and affiliates, including foreign entities.
Proposed changes. Proposed from 1 July 2028, announced in the 2026-27 Budget (12 May 2026) and not yet legislated: refundable offset turnover threshold raised to A$50 million; minimum notional deductions raised from A$20,000 to A$50,000; companies more than 10 years old no longer eligible for the refundable offset. These measures are proposed and not yet law, and current rules apply until then; the Australia hub carries the full list.
Worked example
Illustrative example. Waratah Sensors Pty Ltd, a hypothetical company with a 30 June 2026 income year, is pre-revenue, loss-making and wholly owned by two Australian founders, so its aggregated turnover is well under A$20 million and it is a base rate entity taxed at 25 percent. Its engineers ran one core R&D activity, an experiment on whether a new sensor geometry could hold calibration in the field, with two supporting activities. A state government agency paid a A$100,000 grant towards the project.
| Step | Figures | Result |
|---|---|---|
| Setting up from day one | Timesheets apportion A$500,000 of salaries to the registered activities; an unconnected contractor A$100,000; overheads apportioned A$50,000. A A$50,000 invoice from the founders' service company, an associate, was unpaid at 30 June and is left out until paid | Notional deductions A$650,000, above the A$20,000 minimum |
| Is it worth claiming | 25% plus 18.5% = 43.5% of A$650,000 | Offset A$282,750, refunded in full because there is no tax payable |
| Funding interactions | The A$100,000 recoupment triggers a clawback adjustment that includes in assessable income an amount calculated so as to remove the premium benefit on the recouped expenditure; the premium on A$100,000 at 18.5 points is A$18,500 | The offset is still claimed on A$650,000; the adjustment reduces the year's tax loss |
| Your first claim: registration | One core and two supporting activities registered through the customer portal | Registered by 30 April 2027 |
| Your first claim: the return | R&D tax incentive schedule lodged with the company tax return through the tax agent by 15 May 2027 | A$282,750 refunded on assessment |
Had the founders sold 60 percent of the company to a foreign group with A$40 million of turnover during the year, the group's turnover would have counted in aggregated turnover and the company would have received the non-refundable offset, carried forward with no tax payable.
Related country guide pages
Self-check questions
Answer each question, then open it to compare.
A loss-making company with aggregated turnover of A$3 million, taxed as a base rate entity, has A$400,000 of notional deductions. What does it receive?
The income year ended on 30 June 2026 and the founders first hear of the R&D Tax Incentive in May 2027. What can they claim?
A startup is a subsidiary of a foreign group with A$60 million of worldwide turnover but has only A$1 million of its own. Which offset does it receive?
The founder's own service company invoiced the startup A$50,000 for development work, unpaid at 30 June. Can it be notionally deducted this year?
A state government agency paid the startup a A$100,000 grant for the same project. What happens to the offset?
Official sources
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Educational content only, not tax advice. See the disclaimer.