R&D Tax Incentive 2026 – Rates, Deadlines and Key Changes
Everything you need to know about the R&D Tax Incentive for the 2025-26 income year – current offset rates, registration deadlines, recent legislative changes and what is on the horizon for Australian businesses.
R&D Tax Incentive and government grants specialist, working with software and pharma companies.
The R&D Tax Incentive remains one of the most significant tax benefits available to Australian businesses conducting research and development. For the 2025-26 income year, the program continues to offer substantial refundable and non-refundable tax offsets – but recent legislative changes, tighter compliance measures and evolving AusIndustry enforcement practices mean businesses need to stay informed.
This guide provides a comprehensive overview of the R&D Tax Incentive for 2025-26, including current offset rates, key deadlines, recent legislative changes and what is on the horizon. Whether you are preparing your first claim or reviewing your ongoing R&D program, this is what you need to know.
Current Offset Rates for 2025-26
Companies With Turnover Under $20 Million
Eligible companies receive a 43.5% refundable tax offset on qualifying R&D expenditure. This is the company tax rate (25% for base rate entities) plus an 18.5% premium.
Because the offset is refundable, companies receive the benefit even if they are in a tax loss position. For a company spending $400,000 on eligible R&D, the refundable offset is $174,000 – paid as a cash refund by the ATO.
Companies With Turnover of $20 Million or More
Larger companies receive a non-refundable tax offset with a premium based on R&D intensity.
| R&D Intensity | Premium Above Company Tax Rate | Effective Offset Rate (25% CTR) |
|---|---|---|
| Up to 2% | 8.5% | 33.5% |
| Over 2% | 16.5% | 41.5% |
The $150 Million Expenditure Cap
Notional deductions above $150 million in an income year attract the offset at the company tax rate only – the premium is lost on the portion above the threshold.
Key Deadlines for 2025-26
Missing a deadline can forfeit your entire claim. These are the dates every R&D claimant must know.
| Deadline | Date | Details |
|---|---|---|
| AusIndustry Registration | 30 April 2027 | 10 months after FY end. Strict deadline – extensions only in limited circumstances. |
| Tax Return Lodgement | 15 May 2027* | R&D schedule lodged with company tax return. *Standard tax agent lodgement date. |
| Record Retention | 30 June 2031 (minimum) | All R&D documentation retained for at least 5 years after the income year. |
Recent Legislative Changes
Gambling and Tobacco Exclusion – Before the Senate
Legislation currently before Parliament will exclude activities related to gambling and tobacco from R&D Tax Incentive eligibility, with a carve-out for R&D conducted solely for harm minimisation. The measure was announced in the 2024-25 Mid-Year Economic and Fiscal Outlook, and the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026 passed the House of Representatives on 2 June 2026. It is not yet law, but once enacted the exclusion will apply retrospectively to income years starting on or after 1 July 2025 – affected companies should plan on that basis.
Tighter Compliance Administration
Both AusIndustry and the ATO have stepped up compliance activity. A new registration form applies from 15 August 2025, with expanded technical description sections that track more closely to the legislative tests, and advisers report that departmental reviews now proceed straight to formal examination.
AusIndustry also cross-references registrations with ATO data, IP Australia patent filings and other government program applications.
Clinical Trials Determination
Under the clinical trials determination (in force since 1 April 2022), activities comprising phase 0, I, II or III clinical trials, or pre-market pilot and pivotal studies, for an unapproved therapeutic good are accepted as core R&D activities. Companies indicate reliance on the determination in their registration instead of demonstrating the standard eligibility tests for those activities – the registration process itself is unchanged.
R&D Intensity Premium Explained
The intensity premium determines the non-refundable offset rate for companies with aggregated turnover of $20 million or more (there is no upper turnover limit).
How R&D Intensity Is Calculated
R&D intensity is the ratio of eligible R&D expenditure to total expenses for the income year. Only qualifying R&D expenditure is included in the numerator, and the higher premium applies to the portion of R&D expenditure above the 2% threshold.
Worked Example
| Scenario | Total Expenditure | R&D Expenditure | Intensity | Premium Tier |
|---|---|---|---|---|
| Company A | $50M | $1.5M | 3.0% | 16.5% (higher tier) |
| Company B | $50M | $0.8M | 1.6% | 8.5% (lower tier) |
The intensity threshold creates a step-change in the offset rate. Companies near the 2% threshold should review whether additional eligible activities could push them into the higher premium tier. This is one area where professional advice can identify significant additional value.
Comparison – 2025-26 vs Prior Year
| Parameter | 2024-25 | 2025-26 |
|---|---|---|
| Refundable offset rate (under $20M) | 43.5% | 43.5% |
| Non-refundable – intensity up to 2% | CTR + 8.5% | CTR + 8.5% |
| Non-refundable – intensity over 2% | CTR + 16.5% | CTR + 16.5% |
| Minimum eligible expenditure | $20,000 | $20,000 |
| Expenditure premium threshold | $150 million | $150 million |
| AusIndustry registration deadline | 30 April 2026 | 30 April 2027 |
| Company tax rate (base rate) | 25% | 25% |
| Compliance activity | Enhanced | Expanded further |
The offset rates and caps remain unchanged for 2025-26. The most significant developments are on the compliance side, with expanded review activity and enhanced data matching capabilities.
What Is Ahead
Budget 2026-27: Major Reform From 1 July 2028
Following the Strategic Examination of R&D final report (Ambitious Australia, released 17 March 2026), the Government announced in the 2026-27 Budget on 12 May 2026 the most significant restructure of the R&D Tax Incentive since 2021. These changes are not yet law and will apply from 1 July 2028:
- Supporting R&D activities removed from offset eligibility, paired with a 4.5 percentage point increase in offset rates on core R&D activities. The premium on core activities would rise from the current 8.5% to 18.5% above the company tax rate to 13% to 23% above it. Below the $50,000 minimum, only expenditure with a Cooperative Research Centre or a Registered Service Provider would remain claimable.
- Intensity premium threshold lowered from 2% to 1.5% of expenditure, letting non-refundable claimants reach the top premium of up to 21% above their company tax rate at a lower intensity
- Refundable offset restricted to a company’s first 10 years of operation
- Minimum eligible expenditure raised from $20,000 to $50,000 per year
- Refundable offset turnover threshold raised from $20 million to $50 million
- Maximum expenditure threshold raised from $150 million to $200 million
None of this affects claims for 2025-26, 2026-27 or 2027-28, which proceed under the current rules described above.
Increasing Compliance Focus
The trend toward more active compliance enforcement is expected to continue. Businesses should anticipate that a higher proportion of claims will be reviewed and that assessors will have more data and analytical tools at their disposal. Building robust documentation practices now is an investment in future-proofing your claims.
Watch the Senate
The gambling and tobacco exclusion bill (the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026) passed the House of Representatives on 2 June 2026 and now awaits introduction and debate in the Senate. Once enacted it will apply retrospectively to income years starting on or after 1 July 2025, with a carve-out for activities undertaken solely for harm minimisation. The separate Budget 2026-27 reform package will require its own legislation before the 1 July 2028 start date. Both are worth monitoring, particularly for companies whose claims rely heavily on supporting R&D activities.
Frequently Asked Questions – R&D Tax Incentive 2026
What is the R&D Tax Incentive offset rate for 2025-26?
For companies with aggregated turnover under $20 million, the refundable offset rate is 43.5% – calculated as the 25% company tax rate plus an 18.5% premium. For companies with aggregated turnover of $20 million or more, the non-refundable offset rate is the company tax rate plus either 8.5% or 16.5%, depending on R&D intensity. These rates are unchanged from 2024-25.
When is the AusIndustry registration deadline for FY2025-26?
The deadline is 30 April 2027 – 10 months after the end of the 2025-26 financial year. Extensions are granted only in limited circumstances and should never be relied on. Missing the deadline without an approved extension forfeits the entire R&D Tax Incentive claim for that income year. Begin preparing your registration well before the deadline to allow time for gathering technical descriptions and internal review.
How does R&D intensity affect the offset rate?
R&D intensity is the ratio of eligible R&D expenditure to total expenses. For companies with aggregated turnover of $20 million or more, intensity above 2% triggers a higher premium of 16.5% above the company tax rate on the portion of R&D expenditure above the threshold, compared to 8.5% below it. The higher tier can significantly increase the offset value and is worth optimising with professional advice.
What industries are excluded from the R&D Tax Incentive?
Under current law no industry is categorically excluded. Legislation before Parliament (passed the House of Representatives on 2 June 2026) will exclude activities related to gambling and tobacco, other than R&D conducted solely for harm minimisation, applying retrospectively to income years starting on or after 1 July 2025 once enacted. All industries otherwise remain eligible, subject to the standard requirements of technical uncertainty, systematic experimentation and contemporaneous documentation.
Has the R&D Tax Incentive changed for 2025-26?
The core offset rates and eligibility criteria are unchanged from 2024-25. The most significant developments are expanded compliance activity by AusIndustry, a new registration form from 15 August 2025, and the pending gambling and tobacco exclusion, which once enacted will apply retrospectively to income years starting on or after 1 July 2025. Businesses should be aware of the increased compliance focus and ensure their documentation practices are robust.
Maximise Your 2025-26 R&D Claim
Prime Partners has a dedicated R&D Tax Incentive advisory practice that helps Australian businesses identify eligible activities, build robust documentation and prepare claims that withstand AusIndustry scrutiny.
Use our R&D Tax Incentive calculator to estimate your potential offset, then talk to our team about making it happen.
This guide is current as at June 2026 and is based on the Industry Research and Development Act 1986 and current AusIndustry guidance. It is general information only and does not constitute tax or legal advice. Contact your adviser for guidance specific to your circumstances.