R&D Tax Incentive Australia 2026: Rates and ATO Data

Where this guide comes from: Grantsights sells grant search and funding reports for United States funders only, and none of it covers Australian tax offsets, so nothing below is a sales pitch. Everything here comes from business.gov.au, the ATO, the Budget papers and the ATO's own published claim data. If you'd use an Australian version of our tools, tell us you're in Australia.

R&D Tax Incentive by the Numbers: What 13,490 Companies Claimed

Australian companies reported $16.71 billion of R&D expenditure under the R&DTI for the 2023-24 income year, according to Grantsights analysis of the ATO's 2023-24 transparency data. That's 13,490 companies, up from 12,956 companies and $16.2 billion for 2022-23. The typical claimant is small: the median company reported $375,787, and 59% reported less than $500,000.

Grantsights analysis of 13,490 companies in the ATO's 2023-24 R&DTI transparency report. The "under $100,000" row includes 31 companies reported below $20,000, 8 of them at nil, which the ATO says can reflect adjusted or withdrawn claims. Amounts are expenditure, not offsets.

The money is concentrated at the top. The 100 largest claimants reported 24.2% of all 2023-24 expenditure, and the top 10 reported 7.4%. Two companies went over the $150 million cap: Atlassian Australia 1 Pty Ltd reported $236.3 million and Fortescue Ltd $155.2 million. Above $150 million, the offset falls to the company tax rate, so there's no extra benefit on the excess.

ATO 2023-24 R&DTI transparency report, original amounts as lodged.

Well-known growth companies sit far below that. A case in point: Canva Australia Holdings Pty. Ltd. reported $21.4 million for 2023-24, SafetyCulture Pty Ltd $20.4 million, Xero Australia Pty Limited $11.7 million and Culture Amp Pty Ltd $10.9 million. Medical device maker Nanosonics Limited reported $29.7 million, and Vaxxas Pty Ltd reported $28.7 million, later amended to $27.7 million.

How the R&D Tax Offset Works in 2026

The refundable R&D tax offset is your company tax rate plus an 18.5% premium if your aggregated turnover is under $20 million, according to business.gov.au's Overview of the R&D Tax Incentive (opens in a new tab). The ATO adds that the refundable offset isn't available to companies controlled by income tax-exempt entities. Everyone else gets a non-refundable offset made of the tax rate plus a two-tier premium based on R&D intensity (notional R&D expenditure as a share of total expenditure).

The ATO's company tax rates for 2025-26 (opens in a new tab) are 25% for base rate entities and 30% for other companies. Here's what that means in practice:

Rates from business.gov.au and the ATO's Rates of R&D tax incentive offset page.

The real benefit is the premium, not the headline rate. R&D spending you claim under the R&DTI replaces the ordinary deduction you'd otherwise get. Take a company with turnover under $20 million, paying the 25% rate, that spends the 2023-24 median of $375,787. Its refundable offset is about $163,500 (43.5%), but it would have saved about $93,900 (25%) by deducting the same costs normally. The extra value of the R&DTI is the 18.5% premium: about $69,500. For a loss-making start-up, the bigger win is timing, because the refundable offset arrives as cash after lodgement instead of sitting in carried-forward losses.

Three thresholds decide whether you can claim at all:

• $20,000 minimum. Business.gov.au says your eligible R&D expenditure must be at least $20,000 for the income year, unless you used a registered research service provider (RSP) or contributed to the Cooperative Research Centres Program.
• $150 million maximum. The most you can claim at the premium rate in a year. Two companies were above it in 2023-24.
• Corporations only. An R&D entity must be a corporation, so sole traders and partnerships can't claim. A foreign-incorporated company qualifies only if it's an Australian tax resident or carries on business here through a permanent establishment under a double tax agreement.

What Changes From 1 July 2028

The 2026-27 Budget announced 7 changes to the R&DTI from 1 July 2028, and the ATO's measure page says plainly that the measure is not yet law. Business.gov.au says the program keeps running under the current rules until then. Treasury released an exposure draft, "Better targeting the Research and Development Tax Incentive", for consultation from 11 to 28 September 2026; that consultation is closed.

Sources: Budget Paper No. 2, 2026-27 (measure "Tax Reform: better targeting the Research and Development Tax Incentive"); ATO measure page published 12 May 2026.

According to Budget Paper No. 2, the government expects the package to decrease receipts by $910.0 million and decrease payments by $1.6 billion over the five years from 2025-26. Put simply, the government expects to pay out less in refundable offsets, partly because older companies lose the cash refund and supporting activities drop out, while raising the rate for core experimental work. The Budget paper says the 4.5-point rise increases the offset for core R&D expenditure "by around 25 to 50 per cent".

What it could mean for you, if legislated as announced. A 25%-rate company under $50 million turnover would get 48% (25% plus 18.5% plus 4.5%) on core R&D, but nothing on supporting activities such as routine testing or data collection that aren't core experiments. A 12-year-old company with $30 million turnover would move onto the higher rate but get it as a non-refundable offset. Nothing changes for claims up to the 2027-28 income year.

What Business.gov.au Doesn't Tell You

The program pages explain the rules. The ATO's compliance guidance and the transparency data show where claims go wrong, and four findings should change how you approach a claim.

1. Registration isn't approval. Business.gov.au says registration "does not confirm" your activities are eligible. The R&DTI is self-assessed, and the department can examine your registration before or after it's accepted, for the current year and previous years. If an examination finds activities ineligible, the finding is legally binding, you must amend your tax return, and penalties and interest may apply. That's why a common mistake is treating the registration number as a green light.

2. The ATO names four industries with a significant number of problem claims. According to the ATO's "Helping you get your R&D claims right" page, they're agriculture, building and construction, mining, and software development. The red flags it lists include whole-of-project claims instead of activity-level claims, activities that resolve commercial rather than technical risk, work a competent professional could have worked out without experimenting, unreasonable overhead apportionment, and unpaid amounts to associates. Software claims in particular are flagged for not clearly stating the experiment or the technical uncertainty.

3. Watch who's advising you. The same ATO page says the ATO and the department are concerned about tax agents and consultants who cold call businesses claiming their activities are eligible, who charge excessive commissions that are a large percentage of the refundable offset, and who use late registrations to fund companies in financial difficulty. A percentage fee isn't illegal, but a consultant who approaches you first and promises a refund should be treated as a red flag. Promoter penalty laws can apply to schemes that claim the offset for ineligible activities.

4. Records made after the fact rarely hold up. The ATO points to two tribunal cases, Tier Toys (2014) and Ozone Manufacturing (2013), where claims failed because the companies didn't keep contemporaneous records, so they couldn't show the spending was anything more than normal business costs. Business.gov.au warns that if you can't provide records, the department is likely to decide you didn't conduct eligible R&D. If you're asked for evidence, you get 30 days, a possible 14-day extension, and no more than 92 days in total.

There's also a churn signal in the data. Grantsights compared the ABNs in the 2022-23 and 2023-24 reports: 9,862 companies appear in both, 3,628 appear in 2023-24 but not 2022-23, and 3,093 appear in 2022-23 but not in the 2023-24 list. Some of those gaps are late lodgers who show up in the next report (the 2023-24 file adds 257 late 2022-23 claims), so treat this as an upper bound, but it shows the claimant pool turns over by roughly a quarter a year.

Who Claims the R&D Tax Incentive: Business Size and Industry

Small businesses made up 46% of 2022-23 claimants but claimed less than 15% of the expenditure, according to the ATO's R&DTI transparency report 2022-23. The ATO splits the 12,951 claimants it analysed into three groups:

ATO, R&D tax incentive transparency report 2022-23 (published 25 September 2025). Not-for-profits are excluded: only 5 claimed in 2022-23. Grantsights couldn't read any written ATO analysis of the 2023-24 data on October 29, 2026, because the ATO site refused automated access, so this table uses the 2022-23 report.

Industry is self-reported on the tax return and reflects the company's main activity, not necessarily where the R&D happens. Professional, scientific and technical services (which the ATO says includes scientific research, computer system design and accounting services) leads by a wide margin.

ATO, R&D tax incentive transparency report 2022-23, Tables 2 and 3.

The transparency data doesn't include the state each company is in, the R&D activities, the offset received, or whether it was refundable. The ATO says those details stay confidential under tax law, and companies can't opt out of being named.

How to Claim, Step by Step

There are 6 steps between doing the work and receiving the offset. Here's the sequence business.gov.au and the ATO describe:

1. Self-assess before you start. Check you're an eligible R&D entity and that your activities are core R&D (experiments to generate new knowledge where the outcome can't be known in advance and is found through a systematic progression of hypothesis, experiment, observation, evaluation and conclusion) or supporting R&D directly related to core R&D. Read the excluded activities list (opens in a new tab): market research, mineral and petroleum exploration, management studies, social sciences and humanities research, patenting and licensing admin, compliance with standards, reproducing a commercial product, some internal-administration software, and (for income years from 1 July 2025) gambling and tobacco work other than harm minimisation.
2. Keep records as you go. Hypotheses, test plans, results, time sheets and invoices, dated when created.
3. Consider an advance finding. If you're unsure, the advance finding (opens in a new tab) process gives a legally binding eligibility decision that can cover up to 3 years. You must apply before the end of the income year in which the activities happen, and the department says the average processing time is 90 days. Late applications can't be accepted under any circumstances. Overseas R&D needs a positive overseas finding before you can claim it.
4. Register within 10 months of year end. Apply through the R&DTI customer portal. For a 30 June year end, 2025-26 activities are due by 30 April 2027.
5. Wait for registration. According to business.gov.au's Apply for the R&D Tax Incentive (opens in a new tab) page, the department's target is to process 95% of applications within 40 business days for first-time applicants, 20 business days for applications lodged within 6 months of year end, and 80 business days for those lodged 6 to 10 months after year end. Filing early is faster.
6. Claim in your tax return. Enter the registration number in the R&D tax incentive schedule and lodge with your company tax return.

The ATO lists administrative errors that slow things down: the wrong income year (which can't be fixed by a variation), a subsidiary registering instead of the head company of a consolidated group, and a primary contact who's the consultant rather than someone at the company. If the department makes a decision you disagree with, you have 28 days to ask for an internal review, and after that you can go to the Administrative Review Tribunal.

Grants, Clawback and Other Australian Support

The R&DTI interacts with grants, and a common mistake is to underestimate the clawback. According to the ATO's clawback guide, if you receive a government grant or reimbursement for R&D expenditure you've also claimed the offset on, a clawback adjustment increases your assessable income. It doesn't reduce the grant or the offset; it adds tax. Payments under the Cooperative Research Centres Program are exempt.

That matters if you're also chasing state grants. Our guide to small business grants in NSW covers the NSW Government's current programs, and any of those that pay for the same R&D costs can trigger clawback. Ask your tax adviser to map each grant against your R&D cost centres before you lodge.

Comparing with other countries helps if you have staff or a parent company overseas. Canada's equivalent is a refundable tax credit with very different limits, covered in our SR&ED tax credit guide, and Canadian companies often pair it with NRC IRAP funding. In the UK, the closest grant route is Innovate UK. Those programmes pay for work done in Canada or the UK, and the R&DTI only covers overseas R&D with a positive overseas finding.

Who Should Think Twice Before Claiming

The R&DTI suits companies doing genuine experimental work with documented uncertainty. If you can't show the experiment and the records behind it, a claim is not worth the examination risk. It's a poor fit in these situations:

• You're not a company. Sole traders and partnerships aren't corporations, so they can't claim.
• You spend under $20,000 a year on R&D yourself. You can only claim if the work goes through an RSP or the CRC Program. From July 2028, the proposed floor is $50,000.
• Your "R&D" is mostly building a product with known methods. Routine software development, construction projects and agricultural trials where a competent professional could predict the outcome are exactly what the ATO's guidance flags.
• A consultant contacted you first. The ATO and department say cold calling and refund-based commissions are concerns. Get a second opinion from your own accountant.
• You're relying on the refund to stay solvent. Using late registrations to fund a company in financial difficulty is on the ATO's list of concerning practices, and a department examination can cover previous income years as well as the current one.
• Your company will be more than 10 years old by 2028. If the 2028 changes pass as announced, you'll lose the cash refund even if your turnover stays under $50 million. Plan cash flow on that basis.

Where to Go Next

If your company is doing core R&D now, register your 2025-26 activities well before 30 April 2027, and start contemporaneous records for 2026-27 today. If you're planning a bigger program and want certainty, lodge an advance finding application before 30 June 2027 for this income year's activities. Keep an eye on the legislation for the 1 July 2028 changes, which could raise your rate on core experiments while removing supporting activities and, for older companies, the refund. For other Australian funding, see our guides to small business grants in NSW and Creative Australia grants.

Sources Checked

All pages read and files downloaded on October 29, 2026, unless an archive date is given.

• business.gov.au, R&D Tax Incentive (opens in a new tab) and Overview of the R&D Tax Incentive (opens in a new tab)
• business.gov.au, Check if you are eligible for the R&D Tax Incentive (opens in a new tab) and Excluded R&D activities (opens in a new tab)
• business.gov.au, Apply for the R&D Tax Incentive (opens in a new tab), Apply for an advance finding (opens in a new tab), Assuring integrity in the R&D Tax Incentive (opens in a new tab) and Decisions we make about applications (opens in a new tab)
• ATO, Tax Reform: better targeting the Research and Development Tax Incentive (opens in a new tab) (published 12 May 2026; read via Internet Archive copy of 8 June 2026)
• ATO, Rates of R&D tax incentive offset (opens in a new tab) (Internet Archive copy of 17 October 2025)
• ATO, R&D tax incentive transparency reports (opens in a new tab) and the 2022-23 report's population and industry pages (Internet Archive copies, 2025 and 2026)
• ATO, Helping you get your R&D claims right (opens in a new tab) (Internet Archive copy of 18 April 2026)
• ATO, Clawback guide: government grants and reimbursements (opens in a new tab) (Internet Archive copies, 2026)
• ATO, Company tax rates (opens in a new tab) (2025-26 rates page, Internet Archive copy of 11 August 2026)
• Budget 2026-27, Budget Paper No. 2: Budget Measures (opens in a new tab)
• Treasury, consultations list (opens in a new tab): "Better targeting the Research and Development Tax Incentive: exposure draft", 11 to 28 September 2026, closed
• data.gov.au, Research and Development tax incentive (opens in a new tab): 2023-24 and 2022-23 reports of data about R&DTI entities (CC BY 2.5 AU)