Estimate your R&D Tax Incentive refund before you commit to a claim

A calculator is a useful starting point, but the number it gives you is only as good as the expenditure you feed it. The R&D Tax Incentive is a self-assessed program under Division 355 of the Income Tax Assessment Act 1997, which means you decide what is eligible, you register it with AusIndustry, and you carry the risk if the underlying activities do not hold up. So the useful question is not just "what is 43.5% of my spend", it is "how much of my spend genuinely sits behind eligible R&D activities".

This page walks through the actual arithmetic, the inputs that move the number most, and where estimates usually go wrong.

How is the R&D Tax Incentive calculated?

For companies with aggregated turnover under $20 million, the offset rate is your corporate tax rate plus a 18.5 percentage point premium. At the 25% base rate for base rate entities, that produces the familiar 43.5% refundable offset. The offset is refundable, so if it exceeds your tax liability the balance is paid to you in cash.

The core calculation is simple:

Eligible R&D expenditure × 43.5% = gross offset

If your company is in tax loss, the full amount is typically refundable. If you have taxable income, the offset first extinguishes tax payable and only the remainder is refunded. There is also a clawback interaction: expenditure that gives rise to the offset is effectively removed from your ordinary deductions, so the net cash benefit for a profitable company is smaller than the headline figure suggests.

A worked example for a company under $20m turnover, in loss:

Companies at or above $20 million aggregated turnover use a different mechanism: a non-refundable offset calculated at the corporate tax rate plus a premium tied to R&D intensity, currently 8.5 points up to 2% intensity and 16.5 points above it. The ATO publishes the current rates and thresholds on its R&D Tax Incentive page.

Note also the $150 million expenditure cap and the $20,000 minimum notional deduction threshold, which applies unless your R&D is conducted by a Registered Research Service Provider.

What goes into the expenditure figure?

Most estimates are wrong not because the percentage is wrong, but because the expenditure base is padded or under-counted. The categories that usually apply:

• Salary and wages for employees performing eligible core or supporting activities, apportioned to the actual proportion of their time on R&D. Superannuation, payroll tax and leave loading follow the same apportionment.
• Contractor and consultant fees where the work performed is itself an eligible R&D activity. Associate payments have specific timing rules and generally must be paid in the year to be claimed.
• Overheads such as cloud compute, software licences, and a share of rent and utilities, apportioned on a reasonable and consistent basis.
• Decline in value of tangible assets used in conducting R&D activities.

Excluded or restricted items include core technology expenditure, building construction costs, interest, and expenditure not "at risk" (for example, R&D funded by a grant that reimburses the same cost). Overseas activities generally require an Advance Overseas Finding before the expenditure counts.

The apportionment percentage is the single largest lever in any estimate. Moving a five-engineer team from 40% to 70% R&D allocation changes the offset by tens of thousands of dollars, so the basis for that figure needs to be defensible. Sprint records, ticket histories and commit data are far stronger than a retrospective guess. We cover this in detail in contemporaneous evidence for a defensible R&D claim.

Who qualifies for the calculation in the first place?

Before the arithmetic matters, the entity and the activities have to qualify.

The uncertainty test is where most self-assessments come unstuck. It can be technical (can this architecture sustain the required throughput, will this model generalise beyond the training distribution) or scientific and clinical (does this intervention measurably change a health outcome, is the effect real or artefact). A health-tech company building a symptom-tracking app may find the software itself is routine, while the genuine knowledge gap sits in whether the intervention shifts patient outcomes at all. That can still be a core activity.

If you are unsure which side of the line your work sits on, start with R&D Tax Incentive eligibility criteria for software companies or, for trial-based work, clinical trial R&D Tax Incentive eligibility rules.

What changes for FY2026-27 and beyond?

Announced reforms will affect the numbers for future years, including changes to rate structures and intensity tiers. If you are modelling a multi-year R&D programme, build the estimate on the rules that apply to each income year rather than assuming today's settings persist. We summarise the announced changes in the 2026-27 Budget R&D Tax Incentive overhaul explained.

How Rand turns an estimate into a lodged claim

A calculator gives you a figure. Getting that figure through registration and holding it under review is a different job.

1. Connect your engineering systems. Rand reads GitHub, Jira and equivalent tooling to map what your team actually built, when, and against which problems.
2. Rand drafts the technical narrative. Core and supporting activities are described in the language AusIndustry expects, grounded in the evidence trail rather than generic phrasing.
3. Apportionment is built from real activity. Time allocations are derived from delivery records, not assigned as a flat percentage after year end.
4. Your team reviews. You correct anything that misreads the intent of the work. You know your R&D better than any model does.
5. An Expert Reviewer signs off. A qualified reviewer approves the registration before it goes to AusIndustry, so the claim is not lodged on an AI draft alone.

The pricing model is a service fee rather than a percentage of your refund and there is no ongoing subscription. That matters when you are estimating: with contingency pricing, a larger estimate directly increases what you pay the adviser, which is not a helpful incentive when the question is how much spend is genuinely eligible. For a breakdown of how the models compare, see R&D tax consultant vs software: a cost comparison for startups.

What does it cost, and when do you need to move?

Registration is free. AusIndustry does not charge to register R&D activities, and you can find the requirements on business.gov.au. The cost is the preparation work: either internal time, an adviser fee, or a platform fee.

The deadline is the constraint that catches most companies. Registration is due 10 months after the end of your income year, so 30 April for a 30 June year end. Registration must be complete before you can claim the offset in your company tax return. Late applications are only accepted in narrow circumstances. The full timing picture, including amendment windows and quarterly considerations, is set out in R&D Tax Incentive deadlines: every date that matters.

An estimate produced now, against real engineering evidence, is worth considerably more than a refined one produced in April. It tells you whether the activities are documented well enough to defend, and leaves time to fix the gaps if they are not. Eligibility and the final offset amount always depend on your specific circumstances.