R&D overseas finding, defined

Overseas finding: the approval needed before R&D done outside Australia counts

An overseas finding is the binding AusIndustry decision a company needs before it can claim R&D done outside Australia. The work must itself be R&D, be needed to complete an Australian core activity, be impossible to do solely in Australia for a listed reason, and cost less than the related Australian work. Apply within the income year.

Reviewed by George WalchFacts last verified 31 October 2026

Example

An illustrative Australian diagnostics company needs to validate its assay against a pathogen strain that biosecurity law prevents it importing. The validation runs at a European laboratory for $300,000, while the related Australian core and supporting work costs $900,000. It applies in the income year the overseas work begins, and only from that finding can the $300,000 be claimed.

Legislative reference: Industry Research and Development Act 1986, ss 28C and 28D; Income Tax Assessment Act 1997, s 355-210(1)(d) and (e)

Division 355 is a domestic incentive. Section 355-210 counts an activity conducted outside Australia only while a finding under the Industry Research and Development Act covers it. Without one, the overseas part of an activity earns nothing, however good the science.

The four conditions in section 28D

The overseas activity is itself a core or supporting R&D activity (s 28D(1)).
It has a significant scientific link to a core activity conducted solely in Australia and registered, or reasonably likely to be: the Australian activity cannot be completed without it (s 28D(2) and (3)).
It cannot be conducted solely in Australia because it needs a facility, expertise or equipment not available here, would breach biosecurity or quarantine law, needs a population of living things not available here, or needs a geographical or geological feature not available here (s 28D(4)).
Total actual and reasonably anticipated spend, across all years and by any entity, on the overseas activity and other linked overseas work is less than spend on the Australian core activities and their Australian supporting activities (s 28D(5)).

Timing

Apply before the end of the income year in which the overseas work is conducted or planned. Because a finding takes effect from the start of the year of application, the application should be made in the first year the work happens. Applying in time is not enough on its own: AusIndustry says a positive finding must be in place to claim the overseas spend, and the ATO can still test that spend. It accepts no late applications and grants no extensions. If registration is due before the outcome, include the activities awaiting the finding in the registration.

Where it goes wrong

The common gap is offshore engineering: see overseas contractors. Study sites abroad raise the same question for clinical trials. Where the overseas work is really done for a foreign parent, the conducted-for rule and TA 2023/5 apply as well (see companies with an overseas parent). The finding still has to be followed by annual registration.

Frequently asked questions

Does an offshore development team need an overseas finding?

If the company wants to claim their R&D work, yes. Cost is not an allowed reason, so a team offshore because it is cheaper will usually not meet the third condition.

What if the application is made in the second year of the overseas work?

The finding takes effect from the start of the year in which it is applied for, so first-year overseas spend generally falls outside it. There are no late applications or extensions.

How long does a finding last?

For the duration of the overseas activities it covers, unless the activity changes materially from the certificate, in which case a new finding is needed.

The R&D Tax Incentive is a self-assessment program. This page is general information, not tax, legal or financial advice; eligibility depends on your circumstances and you should seek independent advice for them.