As the end of the financial year approaches, it’s essential for Australian companies engaged in innovation to prepare their R&D Tax Incentive (R&DTI) claims.
This guide walks through what the incentive is, who qualifies, how to claim it step by step, and what’s changing in 2025, so you’re not caught scrambling at tax time.
What is the R&D Tax Credit?
The R&D Tax Incentive is an Australian government program that encourages Australian companies to invest in research and development by offering a tax offset based on eligible R&D expenditure.
There are two types of offsets, depending on your business size:
- Refundable Tax Offset: For companies with an aggregated turnover under $20 million. If you’re in a tax loss position, this can result in a cash refund.
- Non-Refundable Tax Offset: For larger companies. This reduces tax payable but cannot be refunded beyond the tax liability.
The incentive is designed to support activities that involve technical uncertainty or new knowledge, whether you’re developing new products, improving processes, or trialling new technologies. It’s not a grant or subsidy and requires meeting specific legislative criteria.
Who is Eligible?
To qualify for the R&D Tax Incentive, your company must:
- Be incorporated in Australia under Australian law
- Undertake eligible R&D activities in Australia
- Incur at least $20,000 in eligible R&D expenditure during the income year
Eligible activities are split into two categories:
- Core R&D Activities: Experimental work where the outcome is not known in advance and is conducted to generate new knowledge.
- Supporting R&D Activities: Activities directly related to core R&D, such as data collection or testing, provided they meet eligibility criteria.
Routine software upgrades, business process improvements, or off-the-shelf tech integrations generally do not qualify for an R&D Tax Incentive Claim.For a detailed breakdown, visit: Am I Eligible for the R&D Tax Incentive?
Step-by-Step Guide on How to Claim Your R&DTI
- Assess Eligibility
Confirm whether your company and activities qualify under the R&D legislation. This should be done early in the financial year, not retrospectively. - Document R&D Activities
Keep detailed records throughout the year. This includes technical documentation, hypotheses tested, outcomes, expenses, staff time, and any trials conducted. - Register with DISR
You must register your R&D activities with the Department of Industry, Science and Resources (DISR) before claiming. This is a formal application and requires detailed technical information. - Lodge Your Tax Return
After receiving your registration number, include the R&D Tax Schedule with your company tax return lodged through the ATO. - Respond to Compliance Requests
Be prepared for review. Both DISR and the ATO may request further evidence or clarification. Inadequate documentation is a common reason for claims being rejected or scaled back.
Changes in R&D Tax Incentive Program in 2025
There are a few updates worth noting for the 2025 income year:
- Greater Scrutiny on Claims: The ATO and DISR have increased audit activity. Claims without sufficient documentation, or those relying on generic descriptions, are more likely to be flagged.
- Shifts in Industry Focus: High-growth sectors such as AI, biotechnology, and clean energy are increasingly active in the R&D space. However, all sectors are eligible, what matters is whether your work meets the legislative definition.
- Increased Transparency: New reporting measures are in development that may require companies to disclose how much they claim and how the funds are used. While still evolving, it reflects growing pressure for accountability in the incentive system.
What’s Next?
If your company has conducted any work this financial year that could qualify as R&D, now is the time to:
- Audit your activity logs, project files, and cost records
- Confirm eligibility and prepare your registration application
- Review upcoming deadlines and compliance obligations
- Engage a qualified advisor if your internal capacity is limited
EOFY is a busy time. Getting ahead of your R&D claim will save time, reduce risk, and help secure the benefit your company is entitled to.
FAQ: How to Claim R&D Tax Credit
What is an example of an R&D Tax Incentive activity?
The R&D Tax Incentive applies to activities that involve genuine innovation and technical uncertainty. For example, pharmaceutical companies conducting clinical trials, contract research organisations like iNGENū CRO developing treatments on behalf of clients, renewable energy firms building clean-tech solutions, mining companies improving extraction processes, and software start-ups working on blockchain or AI technologies may all qualify.
These activities typically involve experimentation and problem-solving that push the boundaries of what’s currently possible.
Can Rocking Horse help file my R&D activities with the ATO?
No. Rocking Horse does not file your R&D activities or tax return. You will still need to engage an R&D tax incentive consultant or accountant to complete your claim. However, you don’t need to have already registered your R&D with DISR to access funding. In fact, most of our borrowers secure finance before their registration is lodged. As long as an R&D advisor provides a comfort letter confirming that your activities are eligible for the R&DTI and that you intend to register, Rocking Horse can provide funding based on your year-to-date eligible R&D spend—giving you early access to capital without waiting for your tax return.
Fast Track Your R&D Funding with Rocking Horse
Claiming your R&D Tax Incentive takes time—but accessing the cash doesn’t have to.
Rocking Horse offers fast, non-dilutive capital based on your expected R&D refund. That means you can unlock the value of your incentive months before it lands in your account, without giving up equity or waiting for your tax return to process.To learn more about how R&D financing can improve your cash flow and fund your next phase of growth, get in touch with Rocking Horse today.