R&D Tax Incentive calculator
Estimate your Australian R&D tax offset under Division 355. Companies with aggregated turnover under $20 million get a refundable offset of the corporate tax rate plus 18.5 percentage points (43.5% for a base rate entity), paid as cash when in tax loss. Larger companies get a non-refundable, intensity-tiered offset.
43.5% refundable offset
$130,500
If the company is in tax loss, this arrives as a cash refund. If profitable, the offset first reduces tax payable; the net benefit over the ordinary deduction is $55,500.
Estimates only, based on the rates that apply from 1 July 2021 (unchanged for FY2025-26). Eligibility depends on registering core R&D activities with AusIndustry and keeping contemporaneous evidence. This is general information, not tax advice.
Comparing adviser quotes? See what a fee costs as a share of this offset with the R&D adviser fee calculator. Salary on-costs count too: check your state in payroll tax rates by state.
How is the offset worked out?
The offset is a percentage of your notional R&D deductions under Division 355 of the ITAA 1997. For a base rate entity under $20 million turnover, eligible expenditure multiplied by 43.5% gives the gross offset. A company in tax loss typically receives it as a refund; a profitable company uses it first against tax payable. Because the R&D expenditure is claimed through the offset instead of as an ordinary deduction, the net benefit for a profitable company is smaller than the headline figure, which is why the calculator shows both. Current rates are published on the ATO's R&D Tax Incentive page.
A worked example for a company under $20 million turnover that is in tax loss:
| Input | Amount |
|---|---|
| Developer salaries apportioned to R&D | $420,000 |
| Superannuation and on-costs | $52,000 |
| Contractor costs for eligible R&D work | $85,000 |
| Apportioned overheads (cloud, tooling, rent) | $43,000 |
| Total notional R&D deductions | $600,000 |
| Refundable offset at 43.5% | $261,000 |
What goes into the expenditure figure?
Most estimates go wrong on the expenditure base, not the percentage. The categories that usually apply:
- Salaries and wages for employees doing eligible core or supporting activities, apportioned to the share of their time actually spent on R&D. Superannuation, payroll tax and leave follow the same apportionment.
- Contractor and consultant fees where the work itself is an eligible R&D activity. Amounts owed to associates generally have to 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 assets used to conduct the R&D.
Core technology expenditure, interest, and expenditure that is not at risk (for example, costs reimbursed by a grant) are excluded or restricted, and overseas activities generally need an Overseas Finding. The apportionment percentage is the biggest lever in any estimate: moving a five-engineer team from 40% to 70% R&D time changes the offset by tens of thousands of dollars, so the basis for it has to hold up. See what R&D expenditure you can claim and R&D record keeping and contemporaneous evidence.
Frequently asked questions
- How much is the R&D Tax Incentive worth?
- Companies with aggregated turnover under $20 million receive a refundable tax offset equal to their corporate tax rate plus 18.5 percentage points, which is 43.5% for a base rate entity. If the company is in tax loss, the offset is paid as a cash refund. Companies at or above $20 million receive a non-refundable offset of their tax rate plus 8.5 points on R&D intensity up to 2% of total expenses, and plus 16.5 points above that.
- Who is eligible for the refundable 43.5% offset?
- R&D entities (generally companies incorporated in Australia) with aggregated turnover under $20 million, at least $20,000 of eligible R&D expenditure, and registered core R&D activities with AusIndustry within 10 months of year end. Aggregated turnover includes connected and affiliated entities.
- Is the R&D tax offset paid as cash?
- Only the refundable offset (under $20 million turnover) converts to cash, and only to the extent the company has no tax payable to absorb it. A loss-making startup typically receives the full offset as a refund after lodging its company tax return. The non-refundable offset reduces tax payable, with unused amounts carried forward.
- What expenditure counts as eligible R&D expenditure?
- Notional deductions on registered core and supporting R&D activities: typically salaries and on-costs for time spent on R&D, contractor costs, direct costs, and a portion of overheads, plus decline in value of R&D assets. Expenditure is capped at $150 million per year, and amounts must generally be incurred to arm's-length parties for work in Australia unless an Overseas Finding applies.
- Can I claim R&D spend on staff who only partly work on R&D?
- Yes, but only the share of their time genuinely spent on registered core or supporting activities, with salary on-costs following the same apportionment. You need a defensible basis for that share, such as timesheets, sprint records or commit history, rather than a flat percentage applied after year end.
- When is the registration deadline?
- R&D activities must be registered with AusIndustry within 10 months of the end of the income year. For a standard 30 June year end, that is 30 April of the following year. The tax offset is then claimed in the company tax return's R&D schedule.
Want the claim built from your actual engineering work?
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