Navigating the R&D Tax Incentive: What Australian Companies Need to Know
Below, we have outlined the core steps involved in the R&D tax process, important dates to be aware of, plus key issues that can impact eligibility and application outcomes.
The R&D tax process
An R&D entity claiming the R&D tax incentive will progress through 3 main stages:
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Carry out R&D activities during the income year, and incur costs for the R&D carried out.
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Register R&D activities with the Department of Industry, Science and Resources (DISR) within 10 months after the end of the tax income year.
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Lodge income tax return that includes the R&D tax amount.
Key rules and risks to be aware of
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Minimum spend: You need to spend at least $20,000 annually to be eligible (unless you use a registered Research Service Provider).
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No sweat equity: Unpaid work, founder hours, or “sweat” contributions are not claimable.
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Related entities: Ensure proper tax and accounting treatments if you’re claiming for services between connected companies.
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Payment timing matters: For related-party claims, R&D payments must be made in cash before the end of the tax income year.
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Overseas contractors: Subcontractor costs offshore are excluded unless covered by an approved advanced finding.
Eligible R&D must be:
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Focused on creating new knowledge
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Based on technical uncertainty and hypotheses
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Supported by experimentation and testing
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Backed with contemporaneous documentation
Be warned: Marketing, commercial research, and social sciences are explicitly excluded.
R&D rebate debt funding
Once the R&D Entity has started spending money on R&D, it may be entitled to seek a loan against the future R&D benefit from specialist funding providers.
Evolv3 assists with the preparation of comfort letters to support these loans, giving you access to capital sooner, to continue investing in your R&D pipeline.
Overseas R&D
If you plan to do any R&D outside of Australia, you must submit an Advanced Finding Application before the end of the income year — not afterwards. Without it, overseas R&D activities (and costs) will not qualify for the tax incentive.
How we help
Evolv3 are registered R&D tax agents and offer full-service advisory, including:
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Full R&D registration and cost allocations
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Reviews and due diligence on existing and prior R&D tax claims
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Preparation of R&D rebate debt funding comfort letters
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Support with audits from regulators
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Advice and support with R&D management and documentation practices
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Second opinions on complex R&D tax issues
Our specialists are dedicated to ensuring you receive the help you need to identify, claim and manage your R&D tax benefits – while providing tailored, proactive R&D tax advice throughout the entire process.
