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.