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: