Frequently asked questions.

How much can my business claim under the R&D Tax Incentive?

If your company has an aggregated turnover of less than $20 million and is not controlled by exempt entities, you're entitled to a refundable tax offset of 43.5% of eligible R&D expenditure (based on the standard 25% company tax rate). If your company’s aggregated turnover is $20 million or more, you're eligible for a non-refundable tax offset based on your R&D intensity:

  • 0–2% R&D intensity: Offset is 8.5 percentage points above your corporate tax rate

  • Above 2% R&D intensity: Offset is 16.5 percentage points above your corporate tax rate

A $150 million cap applies to the annual amount of notional R&D deductions that can attract the R&D tax offset at the full applicable rate.

How are overseas costs treated under the R&D Tax Incentive?

In general, overseas R&D activities and related costs are not eligible under the R&D Tax Incentive. However, there is a narrow exception where such costs may be included, but only if an Overseas Finding is lodged and approved by the Department of Industry, Science and Resources prior to the end of the income year in which the activities are conducted.

To include overseas R&D expenditure in your claim, all the following must apply:

  • The core R&D activity cannot be conducted in Australia for a valid reason (e.g. access to facilities, expertise, or environmental conditions not available locally);

  • The activity is directly related to your Australian R&D project;

  • An Overseas Finding application is submitted to and approved by the Department;

  • The activity would otherwise meet the definition of a core R&D activity if conducted in Australia.

You must submit the Overseas Finding before the end of the income year in which the overseas activity takes place. If this is missed, the associated expenditure is ineligible.

What is the difference between core and supporting R&D activities?

Core activities are the experimental activities undertaken to generate new knowledge, where the outcome cannot be known or determined in advance based on current knowledge, information, or experience.

To be considered a core activity, it must:

  • Involve a systematic progression of work (e.g. hypothesis, testing, observation, evaluation, conclusion);

  • Be conducted for the purpose of generating new knowledge (including improved materials, products, processes, or services);

  • Contain technical uncertainty that cannot be resolved without experimentation.

These activities form the central focus of your R&D project.

Supporting activities are those that are directly related to the core R&D activities. They do not involve experimentation themselves but are necessary to conduct or enable the core R&D. Examples include:

  • Literature reviews or background research;

  • Data collection, preparation, or cleaning;

  • Prototype manufacturing to test experimental hypotheses;

  • Software development tools used solely to facilitate core activities.

However, if a supporting activity also produces commercial or operational outcomes, it must be shown to be directly related to a core activity and conducted for the dominant purpose of supporting it.

What kind of documentation do I need for a successful R&D claim?

While documentation is not submitted with your R&D Tax Incentive application, you are legally required to maintain records that substantiate your eligibility. These records must demonstrate that the claimed activities meet the definition of core and supporting R&D activities, and that the associated expenditure is directly linked to those activities.

You should retain documentation that evidences:

  • The technical uncertainty being addressed;

  • The hypothesis and experimental process used;

  • Key design iterations, test results, and evaluations;

  • Time-tracking records linked to specific R&D tasks;

  • Invoices, contracts, and payroll records for relevant staff and contractors;

  • Internal communications, technical notes, and progress updates;

  • Any background research (e.g. literature reviews, academic articles, benchmarking).

These materials form your R&D governance file, which is crucial in the event of a review by AusIndustry or the ATO.

At GWN Consulting, we work closely with you to build this internal governance framework, including templates, tracking tools, and tailored documentation strategies to ensure your R&D claim is defensible and audit-ready.