TLDR: The 2025 Budget cycle did not change R&D tax offset rates, the registration deadline, or the core eligibility test in s 355-25 ITAA 1997.
Two things did change: a gambling and tobacco exclusion for income years starting on or after 1 July 2025, and a new AusIndustry registration form released on 15 August 2025. The refundable threshold rise from $20M to $50M is legislated but does not start until income years from 1 July 2028.
Did the 2025 Budget change the R&D Tax Incentive?
Not in the way most searchers expect. No offset rate moved, no threshold moved for the current year, and the definition of a core R&D activity in s 355-25 of the ITAA 1997 is untouched.
The changes that actually bite in this period came from elsewhere: an exclusion that commences with income years starting on or after 1 July 2025, and an administrative rebuild of the registration form.
Treat any headline claiming a new R&DTI rate for FY2025 or FY2026 with suspicion. Check it against the ATO's R&D tax incentive guidance before you rebuild a cash-flow model on it.
Current offset rates and thresholds
Rates for income years commencing on or after 1 July 2021 remain in force, unchanged through FY2025 and FY2026.
| Item | Current position |
|---|---|
| Refundable offset (aggregated turnover under $20M) | Company tax rate plus 18.5 percentage points, commonly 43.5% at a 25% base rate |
| Non-refundable offset (turnover $20M or more) | Company tax rate plus 8.5 points on notional R&D up to 2% intensity, plus 16.5 points on the portion above 2% |
| Expenditure cap | Notional R&D deductions above $150M attract the company tax rate only, with no premium |
| Minimum spend | $20,000 of notional R&D deductions, waived for payments to a Registered Research Service Provider or CRC monetary contributions |
| Registration deadline | 10 months after the end of the income year, 30 April for a 30 June year end |
For the full calculation mechanics, see the complete guide to the R&D Tax Incentive.
Worked example: refundable claimant
A pre-revenue software company with $600,000 of eligible notional R&D expenditure and aggregated turnover well under $20M claims at 43.5%. That is a $261,000 offset. With no tax payable, the full amount is refundable as cash.
Worked example: two-tier intensity premium
A company with $40M of total expenditure, $3M of notional R&D and a 30% company tax rate has an R&D intensity of 7.5%.
- The first 2% of total expenditure, $800,000 of notional R&D, attracts 30% plus 8.5 points, so 38.5%, giving $308,000.
- The remaining $2.2M attracts 30% plus 16.5 points, so 46.5%, giving $1,023,000.
- Total non-refundable offset: $1,331,000, applied against tax payable with any excess carried forward.
The premium is marginal. The higher tier only ever applies to the slice above 2% intensity, never to the whole amount.
The gambling and tobacco exclusion from 1 July 2025
This is the substantive eligibility change in the current cycle. For income years starting on or after 1 July 2025, activities related to gambling or tobacco cannot be core R&D activities and cannot be supporting activities either, unless they are conducted for the sole purpose of harm minimisation.
That is a stricter construction than the standard exclusions in s 355-25(2), which block core status but leave a supporting-activity path open where the dominant purpose test is met. Here, both doors close.
The carve-out is narrow. On a plain reading, a deposit-limit feature inside a wagering product is unlikely to satisfy a sole-purpose test, while a standalone study designed to reduce gambling harm is the clearer fit. Whether a specific activity qualifies depends on its facts.
If your product touches either sector, decide the characterisation before you draft the activity, not after a reviewer asks.
The $20M to $50M turnover threshold
The threshold separating refundable from non-refundable claimants is legislated to rise from $20M to $50M aggregated turnover for income years from 1 July 2028. It has no effect on FY2025, FY2026 or FY2027 claims.
Companies crossing $20M in the meantime move to the non-refundable offset in the year they cross, with the two-tier intensity premium applied as above. That is a real cash-flow event: the offset stops being a refund and becomes a reduction in tax payable, with excess carried forward.
If you are forecasting past FY2028, model the change. If you are lodging now, ignore it.
New AusIndustry registration form (August 2025)
AusIndustry released a new version of the online customer portal registration form on 15 August 2025. The structure is a field-by-field questionnaire: projects first, then core activities, then supporting activities.
The practical consequence is that a core activity is no longer one narrative you paste in. It is split across separate fields, each with its own character minimum:
- Sources investigated
- Why a competent professional could not know the outcome in advance
- Hypothesis
- Experiment
- Evaluation and conclusions
- New knowledge generated
Each field has to answer its own question. A hypothesis field filled with project background will read as thin, and a "sources investigated" field that lists internal meetings rather than worldwide publicly available knowledge misses the standard in s 355-25(1)(a). See our guide to core versus supporting activities for how to split the work before you start typing.
The business.gov.au registration page is where the current portal and guidance live.
Where the reform pressure is coming from
The 2025 cycle was quiet on rates because the policy debate had moved to structure: how the program is administered, how eligibility is assessed, and whether the incentive is well targeted at the activities it is meant to fund.
That debate is where the next material change is likely to originate, rather than a surprise rate cut. We cover the direction of travel in the 2026-27 Budget overhaul explainer.
For planning purposes, the sensible assumption is that eligibility scrutiny tightens before rates move. Documentation quality is the exposure that compounds.
What this means for your FY2025 and FY2026 claim
Here is what a founder or finance lead should do differently.
- Lodge on the same timetable. Registration is still due 10 months after year end. For a 30 June 2025 year end, that is 30 April 2026. Missing it is not curable, and the offset cannot be claimed without a registration. Our deadlines guide lists the rest.
- Check your commencement date against the gambling and tobacco exclusion. It applies to income years starting on or after 1 July 2025, so FY2026 for a standard June balancer, not FY2025.
- Redraft activity descriptions to the new form fields. Old narrative-style descriptions will need to be broken apart, and each field carries a minimum length for a reason.
- Apply for findings before year end if you need them. An advance finding must be applied for before the end of the income year in which the activities are conducted, and an overseas finding before the end of the first income year in which the overseas activities occur. No extensions are granted in any circumstances.
- Confirm your company tax rate before quoting an offset rate. 43.5% assumes a 25% base-rate entity. A company under $20M turnover that is not a base-rate entity (for example, one with predominantly passive income) pays tax at 30% and claims at 48.5%.
Common misreadings of the 2025 changes
Three errors keep surfacing in commentary and in draft claims.
"The non-refundable rate is 38.5%." It has not been a flat rate since income years commencing on or after 1 July 2021. 38.5% is only the effective rate on the first tier for a 30% taxpayer, as the worked example shows.
"The intensity premium has three tiers." It has two. The three-tier version was a 2019 draft that was never enacted.
"The threshold is $50M now." It is $20M until income years starting 1 July 2028.
One more worth naming: the assumption that a new form means new eligibility rules. It does not. The test in s 355-25 and the exclusions in s 355-25(2) are unchanged; the form simply asks for the same evidence in more places, which exposes claims that were previously carried by a single well-written paragraph.
How to stay ahead of the next change
The changes that hurt are rarely the ones announced on Budget night. They are commencement dates buried in enacted legislation, and administrative shifts like a new form version that quietly raise the evidence bar.
The defence is the same in every cycle: keep contemporaneous evidence of the hypothesis, the experiment and the evaluation as the work happens, grouped by knowledge gap rather than by product.
Rand builds each core activity from engineering and project evidence into the current AusIndustry field structure, so a form change becomes a re-render rather than a rewrite.
If you are working through your first claim, start with the complete guide to the R&D Tax Incentive, or the software eligibility criteria if your uncertainty is technical. This article explains the rules and is not tax advice; how they apply depends on your company's circumstances.