Research and Development Tax Incentive

The Research and Development (R&D) Tax Incentive is the government’s key mechanism to stimulate industry investment in R&D in Australia. 

R&D drives innovation that leads to productivity improvements and economic growth. 

The R&D Tax Incentive offsets some of the costs to encourage Australian industry to undertake additional R&D activities. For example, the offset helps to reduce the financial risks associated with industry R&D investment decisions, including:

• uncertainty about whether the potential for longer term gains from developing new or improved products or services will be worth the cost of a company’s R&D 
• that a company may not capture the full benefit of its R&D due to the 'spill over' of knowledge to competitors and the rest of the economy.

How the R&D Tax Incentive is administered

Industry Innovation and Science Australia (IISA) and the Australian Taxation Office (ATO)  jointly administer the R&D Tax Incentive. Our department assists IISA to register R&D activities, while the ATO manages the rules for eligible entities and expenditure. 

Each year IISA reports on the R&D Tax Incentive in their annual report.  

We report the R&D Tax Incentive’s budget impact (the refundable tax offset and the non-refundable tax offset) annually in the science, research and innovation budget tables.

R&D Tax Incentive reviews

Our department is committed to continually improving the performance of the program to ensure its success and longevity informed by recent reviews like:

• Board of Taxation review of the R&D Tax Incentive (2022)
• ANAO report on the administration of the R&D Tax Incentive (2021)
• Review of the R&D Tax Incentive (2016).