Research and Development Tax Incentive

Posted 13 Apr '22

Encouraging businesses to invest in Research and Development.

Research and Development is often the first critical step in innovation. It drives technological improvements that lead to productivity improvements and increased economic growth.  Companies tend to underinvest in R&D for several reasons, including:

  • not being able to capture the benefits of their R&D because new knowledge tends to leak out or 'spill over' to benefit competitors and the rest of the economy
  • difficulties finding external finance because of uncertainties around the likely success of their R&D projects

This is why the government is encouraging industry to invest more in R&D. The tax incentive offers a way for companies to invest in R&D while alleviating some of their initial reasons for not investing.

Eligibility for the R&D Tax Incentive

The tax incentive reduces company R&D costs by offering tax offsets for eligible R&D expenditure.

Eligible companies with a turnover of less than $20 million receive a refundable tax offset, allowing the benefit to be paid as a cash refund if they are in a tax loss position. All other eligible companies receive a non-refundable tax offset to help reduce the tax they pay.

The program is available to companies who are:

  • incorporated under Australian law
  • incorporated under foreign law but an Australian resident for income purposes
  • incorporated under foreign law and a resident of a country with which Australia has a double tax agreement

Click here to learn more about the Research and Development Tax Incentive.


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