Proposed, not law. Treasury consulted on exposure draft legislation from 10 September 2026 to 28 September 2026. Checked 16 October 2026.
Budget 2028 R&D Tax Incentive impact calculator
The 2026-27 Budget proposes changing the R&D Tax Incentive from 1 July 2028: supporting activities removed, refundability limited to companies under 10 years old (15 for therapeutic goods) with a $50m turnover threshold, rates up 4.5 points, a 1.5% intensity threshold, a $50,000 minimum and a $200m cap. Enter your figures to compare today's offset with the proposed one.
Includes connected and affiliated entities.
Notional R&D deductions for one income year.
For R&D intensity on the non-refundable offset. Left blank, the R&D spend is taken as all expenses.
Work that supports a core activity without testing a hypothesis itself.
For the first affected year, count to 30 June 2029 for a June year end.
Medicines, medical devices and other therapeutic goods.
30% if more than 80% of assessable income is passive income, such as interest.
Today
$522,000
43.5% refundable
Proposed, from 1 July 2028
$460,800
48% refundable
Difference: -$61,200 a year on the same figures.
What drives the difference
Each measure is applied in turn, in this order, so the amounts add up to the difference.
Supporting R&D activities removed
$240,000 of supporting activity spend (20%) no longer earns the offset unless the work qualifies as core R&D on its own.
-$104,400
Minimum spend rises from $20,000 to $50,000
Core R&D spend of $960,000 meets the $50,000 minimum.
No change
Refundable offset limited to companies under 10 years old (15 for therapeutic goods)
At 6 years the company is inside the 10-year limit.
No change
Refundable turnover threshold rises from $20m to $50m
Turnover is already under $20m, so the higher threshold changes nothing.
No change
Core offset rates rise by 4.5 points
Refundable 43.5% becomes 48%; non-refundable 33.5% and 41.5% become 38% and 46%.
+$43,200
Intensity threshold falls from 2% to 1.5%
Only applies to the non-refundable offset.
No change
Expenditure cap rises from $150m to $200m
Spend is under $150m, so the higher cap changes nothing.
No change
These are proposed measures, not law, and they can change before a bill passes. Estimates only, on stated assumptions: no Research Service Provider or CRC spend, not controlled by tax exempt entities, and no clawback for grants or feedstock. This is general information, not tax advice. Rand prepares R&D registrations and evidence; it is not a tax agent and does not lodge tax returns.
What the proposed changes are
Seven measures, all proposed to start together for income years from 1 July 2028. The rates and thresholds come from the Treasury consultation on the exposure draft and published summaries of the draft bill.
| Measure | Today | Proposed from 1 July 2028 |
|---|---|---|
| Supporting R&D activities | Eligible when directly related to a core activity (some need a dominant purpose test) | Removed: only work that meets the core R&D definition on its own |
| Refundable turnover threshold | Aggregated turnover under $20m | Aggregated turnover under $50m |
| Refundability age limit | None | Under 10 years old, or 15 for eligible therapeutic goods R&D |
| Refundable rate | Company tax rate + 18.5 points (43.5% at 25%) | Company tax rate + 23 points (48% at 25%) |
| Non-refundable rates | Tax rate + 8.5 points, + 16.5 points above 2% intensity | Tax rate + 13 points, + 21 points above 1.5% intensity |
| Minimum spend | $20,000 (RSP and CRC spend exempt) | $50,000 (RSP and CRC spend still exempt) |
| Expenditure cap | $150m, then the company tax rate | $200m, then the company tax rate |
How the estimate works
Today's figure uses the same offset formula as the R&D Tax Incentive calculator. The proposed figure prices the same spend again under the draft rules. To show what drives the difference, the calculator applies the measures one at a time, in the order shown in the results: supporting activities first, then the minimum spend, the age limit, the turnover threshold, the rates, the intensity threshold and the cap. Each amount is the change that measure makes on top of the ones before it.
Two points are worth checking with your adviser. Exactly $50m of turnover is treated as non-refundable, because today's rule is "less than" the threshold. Company age is counted at the end of the income year, so a company that turns 10 during the year is treated as past the limit for that year.
Frequently asked questions
- Are the 2028 R&D Tax Incentive changes law?
- No. They are exposure draft legislation, the Treasury Laws Amendment (Tax Reform No. 5) Bill 2026: Better targeting the Research and Development Tax Incentive. Treasury consulted on it from 10 September 2026 to 28 September 2026. It still has to be introduced and passed by Parliament, and the detail can change before then. Current years are claimed under the current rules.
- When would the changes start?
- For income years starting on or after 1 July 2028, if the bill passes in its current form. For a company with a 30 June year end, the first affected year would be 2028-29, the year ending 30 June 2029.
- What happens to supporting R&D activities?
- Supporting activities would no longer be a separate eligible category. Work that only supports a core activity, such as building test infrastructure or gathering data, would earn an offset only if it meets the core R&D activity definition on its own. Companies with a high share of supporting spend see the largest fall.
- How is the 10-year refundability limit counted?
- The draft counts age from a start day, not simply from incorporation. Advisers read it as the earlier of when the company, or a connected entity, first carried on an enterprise and when it first registered R&D. A company near 10 years should check its own start day against the draft with its adviser.
- Who gets the 15-year limit for therapeutic goods?
- Treasury describes it as applying to eligible firms doing R&D related to therapeutic goods, recognising the longer development timelines in biotechnology and medical technology. The calculator assumes your R&D qualifies if you choose Yes; the draft sets conditions for eligibility.
- Do larger companies gain or lose?
- Larger companies claim the non-refundable offset, which gains from the higher rates, the 1.5% intensity threshold and the $200m cap. They lose the offset on supporting activity spend. Whether the net result is a gain depends on that share, which is why the calculator asks for it.
- What should we do now?
- Nothing changes for current years: register this year's activities with AusIndustry on the current rules. Keeping records that separate core experiments from supporting work now makes a 2028 estimate easier and will matter if the measure passes. Your accountant or registered tax agent handles the tax return and the R&D schedule.
Separate core from supporting work now
Rand drafts your AusIndustry registration from your GitHub and Jira evidence and records which work is core R&D and which is supporting. Your team reviews it and Expert Reviewers approve it. Check your eligibility in 3 minutes, no signup required.