R&D Tax Incentive Advisory & Claim Support – Prime Innovation

R&D Tax Incentive Advisory for Australian Businesses

The R&D Tax Incentive is one of Australia’s most valuable government programs supporting innovation. However, accessing the benefit requires careful alignment with both AusIndustry technical criteria and ATO tax law requirements.

Prime Innovation, a specialist division of Prime Partners, helps businesses assess eligibility, structure defensible claims and implement documentation processes that withstand regulator scrutiny.

We work with companies undertaking product development, software engineering, manufacturing improvement and technical experimentation across Australia.

Request an R&D Eligibility Review

What Is the R&D Tax Incentive?

The Research and Development Tax Incentive (R&DTI) is the Australian Government’s flagship program for encouraging business innovation. Administered jointly by AusIndustry and the Australian Taxation Office, it provides a tax offset for companies conducting eligible R&D activities in Australia.

The R&D Tax Incentive is an entitlement program – not a competitive grant. If your company meets the eligibility criteria and conducts qualifying R&D activities, you are entitled to claim the offset. No application is assessed on merit; the entitlement follows from eligibility.

Who Is Eligible for the R&D Tax Incentive?

To claim the R&D Tax Incentive, your business must satisfy three core requirements:

Eligible Entity

Your business must be an Australian incorporated company (or a foreign corporation that is an Australian resident for tax purposes). Trusts, partnerships, and sole traders are not eligible to claim directly.

Eligible Activities

Your activities must involve experimental work where the outcome cannot be known in advance. Core R&D activities must follow a systematic progression from hypothesis to experiment, observation, and evaluation.

Eligible Expenditure

Eligible costs include employee wages, contractor payments, materials, software, and depreciation on assets used for R&D. A minimum of $20,000 in expenditure is generally required.

How the R&D Tax Offset Works

The R&D Tax Incentive provides a tax offset calculated as a premium above your company tax rate. The rates and structure differ based on your company’s aggregated turnover.

Companies with Turnover Under $20 Million – Refundable Offset

Component Rate
Company tax rate (base deduction) 25%
R&D premium +18.5%
Total R&D tax offset 43.5%

This offset is refundable – if your company is in a tax loss position, the full 43.5% is received as a cash refund from the ATO. This is particularly valuable for startups and early-stage companies that are not yet profitable.

R&D Tax Benefit by Scenario

The actual benefit depends on whether your company is profitable or in a loss position:

Eligible R&D Spend Profitable Company
Net benefit (18.5% premium)		 Company in Losses
Cash refund (43.5% offset)
$100,000 $18,500 $43,500
$250,000 $46,250 $108,750
$500,000 $92,500 $217,500
$1,000,000 $185,000 $435,000
$2,000,000 $370,000 $870,000

Profitable company: The net benefit is 18.5% – the premium above the standard 25% company tax deduction you would receive regardless. Company in losses: The full 43.5% is received as cash, since the base 25% deduction has no current value when there is no taxable income to offset.

Companies with Turnover of $20 Million or More – Non-Refundable Offset

R&D Intensity Offset Rate
Up to 2% of total expenditure Company tax rate + 8.5%
Above 2% of total expenditure Company tax rate + 16.5%

The non-refundable offset can be carried forward to offset future tax liabilities. Eligible R&D expenditure is capped at $150 million per financial year.

R&D Tax Incentive Advisory Services

Prime Innovation provides end-to-end R&D Tax Incentive consulting. Our team combines technical knowledge with tax and accounting expertise to ensure claims are accurate, compliant, and maximised within regulatory boundaries.

  • Eligibility assessment – Evaluation of activities against AusIndustry criteria
  • Claim preparation and lodgement – Full management of AusIndustry registration and ATO tax schedule
  • Technical documentation – Contemporaneous records that satisfy the experiment and new knowledge requirements
  • Expenditure modelling – Accurate identification and allocation of eligible costs across wages, contractors, materials, and overheads
  • Amended returns for prior years – Where AusIndustry registration was lodged on time but the R&D schedule was not included in the original tax return, we can lodge amendments within the standard 2-year (or 4-year for larger entities) amendment period
  • ATO and AusIndustry review support – Representation and defence if your claim is reviewed or audited
  • Ongoing R&D governance – Frameworks to ensure documentation is audit-ready year after year

Related Advisory Services

Many innovation-led businesses also require complementary services as their R&D activity scales:

Innovation Grants Advisory

Where relevant, we also assist clients to identify and apply for innovation grants that complement R&D Tax Incentive claims, including:

  • Export Market Development Grants (EMDG) – Matched funding for eligible SMEs undertaking export marketing activities
  • Industry Growth Program – Early-stage commercialisation grants ($50k–$250k)
  • Medical Research Future Fund (MRFF) – Funding for health and medical research projects
  • State-based innovation programs – NSW MVP grants, Victorian industry programs, and others
  • Cooperative Research Centres (CRC-P) – Collaborative industry-research partnerships

Grant programs change frequently. Contact us for current programs relevant to your business.

Industries We Support

R&D occurs in every sector. Prime Innovation works with companies across a wide range of industries:

Technology & Software

SaaS development, AI and machine learning, cybersecurity, cloud infrastructure, mobile and web applications

Manufacturing & Engineering

Product design, process automation, materials testing, advanced manufacturing, quality control innovation

Agriculture & AgTech

Precision agriculture, crop science, sustainable farming, livestock management, agricultural IoT systems

Construction & Built Environment

New construction methods, energy efficiency, BIM innovation, prefabrication, structural engineering R&D

Healthcare & Medical Devices

Medical device development, clinical software, diagnostic tools, telehealth, health data analytics

Food, Beverage & Mining

Product formulation, food safety innovation, packaging R&D, extraction technology, mine automation

How We Work

Our process is structured to ensure compliance, accuracy, and efficiency at every stage.

1. Initial Eligibility Discussion

We review your business activities to determine whether they are likely to qualify for the R&D Tax Incentive or other government programs. This typically takes 30–60 minutes.

2. Activity Review and Scoping

Our R&D consultants conduct a detailed review of your projects, identifying all eligible core and supporting R&D activities and estimating the expected benefit.

3. Documentation and Evidence

We work with your technical team to compile contemporaneous documentation – project records, experiment logs, technical reports, and expenditure evidence. Where gaps exist, we help build documentation frameworks.

4. Expenditure Calculation

Our accounting team calculates eligible R&D expenditure, including staff time allocation, contractor costs, materials, and overhead apportionment.

5. AusIndustry Registration & Lodgement

We prepare and submit your registration with AusIndustry within the required 10-month deadline, then incorporate the R&D Tax Incentive Schedule into your company tax return for lodgement with the ATO.

6. Ongoing Support

Year-round advisory support including R&D governance frameworks, real-time activity tracking, and full representation if the ATO or AusIndustry initiate a review of your claim.

Compliance and Documentation

The R&D Tax Incentive is subject to review by both AusIndustry and the Australian Taxation Office. In recent years, the ATO has increased its focus on R&D claims, particularly in software development and professional services.

Claims must demonstrate:

  • Genuine experimental activity with technical uncertainty
  • A systematic progression from hypothesis to experiment and evaluation
  • Contemporaneous documentation created at or near the time of the R&D
  • Appropriate expenditure allocation between R&D and non-R&D activities

Our Compliance Approach

Our role is to ensure claims are technically robust, defensible and aligned with regulator expectations. We take a documentation-first approach:

  • Claims are structured to withstand ATO and AusIndustry scrutiny
  • Documentation frameworks follow current ATO best practice guidelines
  • Expenditure methodologies are conservative and well-evidenced
  • We prepare clients for potential review from the outset, not after the fact

This approach protects your claim and reduces the risk of adverse findings, clawbacks, or penalties.

Fixed Fee R&D Advisory – No Percentage of Your Refund

Prime Innovation charges a fixed fee for R&D Tax Incentive advisory and claim preparation. We do not charge a percentage of your refund or tax offset.

This distinction matters. The ATO has publicly identified contingency-fee arrangements – where advisers charge a percentage of the R&D benefit – as a compliance risk factor. In its 2025-26 compliance priorities, the ATO specifically flags R&D advisers who “charge fees on a contingency basis” as attracting increased scrutiny.

When an adviser’s fee is tied to the size of your claim, the incentive is to maximise the claim – not to get it right. The ATO has noted that contingency arrangements “can indicate a refund claim is at higher risk of being incorrect.”

Why Fixed Fee Protects You

  • No incentive to overclaim – our fee is the same whether your eligible expenditure is $200,000 or $2 million
  • Aligned interests – we focus on building a defensible claim that withstands ATO and AusIndustry review
  • Transparent costs – you know what you are paying before we begin, not after you receive your offset
  • Reduced compliance risk – fixed-fee claims are less likely to attract ATO review than contingency-based claims

The Federal Court has imposed penalties exceeding $36 million across recent promoter penalty cases involving inflated R&D claims. In every case, the taxpayer – not just the adviser – was liable for the shortfall, penalties and interest.

As Chartered Accountants Australia and New Zealand members, we are bound by professional standards that prioritise accuracy and compliance over commercial incentives.

Read our guide: How to Choose an R&D Tax Incentive Adviser

Why Prime Innovation?

Integrated Tax Expertise

Backed by Prime Partners, your R&D claim integrates with your broader tax strategy – not prepared in isolation by a standalone R&D firm.

Technical Understanding

Our consultants understand both AusIndustry eligibility criteria and the commercial realities of running an innovative business.

End-to-End Service

From eligibility assessment through to ATO lodgement and review defence. No handoffs, no gaps between R&D advisors and your accountant.

Frequently Asked Questions

What is the R&D Tax Incentive in Australia?
A government program providing tax offsets for eligible research and development activities undertaken by Australian companies. It is administered jointly by AusIndustry and the ATO, and is an entitlement program – not a competitive grant.
How much is the R&D tax offset for small businesses?
For companies with turnover under $20 million, the R&D tax offset is 43.5% (the 25% company tax rate plus an 18.5% premium). This is refundable – companies in a tax loss position receive the full 43.5% as a cash refund from the ATO.
What activities qualify as R&D?
Activities involving experimentation to resolve technical uncertainty, including software development, engineering testing, manufacturing process innovation, agricultural trials, and medical device development. The outcome must not be knowable in advance based on existing knowledge.
Can startups claim the R&D Tax Incentive?
Yes, provided the business operates through an Australian incorporated company. Startups are often the greatest beneficiaries because the refundable offset provides cash even when there is no taxable income.
What is the deadline for registering R&D activities?
You must register with AusIndustry within 10 months after the end of your income year. For companies with a standard 30 June financial year, this means registration by 30 April of the following year. Late registrations are not accepted.
Can I claim R&D for software development?
Yes, when the development involves generating new knowledge or creating processes that cannot be achieved by applying existing techniques. Routine development, configuration of existing software, or work with a known solution does not qualify.
What records do I need to support an R&D claim?
Contemporaneous records including project plans, experiment logs, meeting minutes, technical reports, and evidence of expenditure. Records should be created at or around the time the R&D activities are conducted.
Can I claim for R&D conducted in prior years?
Only if the R&D activities were registered with AusIndustry within the original 10-month deadline. If registration was lodged on time but the R&D schedule was not included in the tax return, amendments may be possible within the standard 2-year (or 4-year for larger entities) amendment period.
What happens if the ATO reviews my R&D claim?
The ATO and AusIndustry can review claims to verify eligibility and expenditure accuracy. Prime Innovation provides full representation and support, including preparing technical submissions and negotiating outcomes.

Request an R&D Eligibility Review

Not sure if your activities qualify for the R&D Tax Incentive? We can assess your eligibility and provide an indication of the potential benefit.

Contact Prime Innovation