R&D Tax Incentive – Your Next Claim Starts Now

If your company undertook research and development activities in the year ended 30 June 2025, the registration deadline with AusIndustry was 30 April 2026. For those who lodged on time, the next step is ensuring your claim is accurate and defensible. For those who missed the deadline, it is important to understand that no extension is available – and to focus on getting the current year right.

Either way, now is the time to understand how the R&D Tax Incentive (RDTI) works, what the ATO and AusIndustry are looking for, and how to build a stronger claim for the year ahead.

What the R&D Tax Incentive Offers

The RDTI is one of the Australian Government’s most significant incentives for innovation. It provides a tax offset for eligible research and development activities, which can be worth up to 43.5% of eligible R&D expenditure for companies with an annual turnover under $20 million. This offset is refundable, meaning you can receive it as a cash payment even if your company is in a tax loss position.

For larger companies, a non-refundable offset applies, which can still meaningfully reduce tax liability.

What Has Changed

In August 2025, AusIndustry released an updated application form for registering R&D activities through the RDTI portal. This updated form is now mandatory for all applications and requires significantly more detail than its predecessor. Any draft applications created before August 2025 were deleted and cannot be retrieved.

The updated form places greater emphasis on demonstrating genuine technical uncertainty, documenting the experimental process, and clearly distinguishing core R&D activities from supporting activities and routine development work.

What AusIndustry Is Looking For

Many R&D claims are not rejected because the work was not genuine — they are rejected because the application does not clearly explain the technical process. AusIndustry requires applicants to provide:

• A clear description of the experimental process, including the hypothesis, experiments conducted, evaluations performed, and conclusions reached
• An explanation of why the technical knowledge generated is new — not just new to the company, but new in a broader sense
• Evidence of how the company determined the outcome could not have been known in advance, including what existing knowledge was investigated
• A clear connection between supporting R&D activities and the corresponding core activity they relate to
• Identification of specific R&D activities within a project, rather than claiming an entire project as R&D

This last point is particularly important. A software development project, for example, may include both eligible R&D components and routine development work. The two need to be clearly separated.

Common Mistakes That Trigger Reviews

The ATO reviews a significant proportion of R&D claims, particularly first-time claimants and high-value claims. Common issues that attract scrutiny include:

• Vague or generic activity descriptions that do not demonstrate technical uncertainty
• Claiming 100% of salaries when only a portion of time was spent on eligible R&D
• Poor record keeping – records created retrospectively at tax time are often rejected
• Including activities that are routine software development, bug fixing, or standard configuration of off-the-shelf tools

Looking Ahead to the FY26 Claim

For companies currently undertaking R&D activities in the year ending 30 June 2026, now is the time to ensure contemporaneous records are being kept. The ATO expects documentation to be created at the time activities are conducted — not reconstructed later.

This means project logs, test results, timesheets, and documentation of technical uncertainty should be maintained as the work happens. A well-documented claim is a defensible claim.

If your business is undertaking research and development and you want to understand whether you are eligible, or if you want to ensure your current year records are in order, Simmons Livingstone can help. Contact us on 1800 618 800 or email admin@simmonslivingstone.com.au.