The Research and Development (R&D) Tax Incentive program, administered by the Department of Industry, Science and Resources (AusIndustry) and the Australian Taxation Office (ATO), is designed to support businesses undertaking eligible R&D activities by providing a tax offset.
If your company undertook Research and Development (R&D) activities during the 2025 income year where outcomes were uncertain and required systematic experimentation, you may be eligible for the R&D Tax Incentive. The program rewards innovation by providing tax offsets that can improve business cash flow. Now is an ideal time to review your projects to ensure you don’t miss out on claiming your entitlement.
Key deadline
The deadline to submit an R&D Tax Incentive application for the financial year ending 30 June 2025 is 30 April 2026.
With this deadline approaching, businesses intending to claim the R&D Tax Incentive for the 2025 income year should act promptly to allow sufficient time for preparation and submission to AusIndustry.
What qualifies as R&D?
To qualify, activities must meet strict eligibility requirements.
Core R&D activities are experimental activities where the outcome is not known in advance. These activities must follow a systematic progression of work based on scientific principles — moving from hypothesis to experimentation, observation and evaluation. The process should lead to logical conclusions and generate new knowledge.
If your business has been developing new systems, experimenting with product designs, or solving technical challenges where results were uncertain, your activities may qualify.
Tax offsets available
| For businesses with an annual turnover of less than $20 million | For businesses with aggregated turnover of $20 million or more |
Eligible for a refundable tax offset of 18.5% above the company tax rate, resulting in a total offset of:
| Eligible for a non refundable tax offset, calculated based on R&D intensity (percentage of total eligible R&D expenditure):
|
How Prosperity can help
Our Tax team provides specialist advice on the R&D Tax Incentive, guiding clients through every stage of the process, including:
- Eligibility assessment - determining whether activities qualify and which offset applies
- Maximising deductions - identifying eligible projects and optimising notional deductions
- Application support - preparing robust submissions to AusIndustry that clearly demonstrate hypotheses, experimentation and new knowledge generated
- Tax return compliance - preparation of the R&D Tax Schedule for inclusion in your annual tax return
- Broader innovation support - assisting early stage businesses with the Early Stage Innovation Company (ESIC) concessions, including structuring advice and Private Binding Rulings where appropriate
Our integrated approach helps clients leverage both R&D and ESIC incentives to support growth and innovation.
Take action now
If your business has undertaken R&D activities, it may be entitled to significant tax benefits. Acting early supports compliance and maximises your claim.
Please contact your Principal Adviser at Prosperity to discuss your R&D eligibility and submission requirements.