R&D Tax Facts – 2025 Issue #3

5 Aug

Our R&D Tax Facts is a summary of important developments in the world of the R&D Tax Incentive (R&DTI) over the last 3 months. More detailed articles on government funding programs and strategies can also be found on the Insights section of our website.

FY2025 R&D Tax Incentive Applications now open

Companies can now register their eligible R&D activities for the YE 30 June 2025!

To access a valuable R&D Tax Offset, the first step is to register eligible R&D activities with the Department of Industry, Science & Resources (DISR, formerly AusIndustry). This is achieved via the preparation and lodgement of an R&D Application using the online R&D Tax Incentive portal.

With the 2025 financial year now complete, the window for registering R&D activities between 1 July 2024 and 30 June 2025 is now open and companies will have until 30 April 2026 to complete the registration of their eligible FY2025 R&D activities.

Application Form changes

The DISR has announced that the current R&D Application Form will be significantly updated on 15 August. The stated purpose of the updates is to make it easier for applicants to assess if their R&D activities qualify and to reduce the need for DISR to request more information as part of the registration process.

The updates proposed include:

Reordering of sections of the form to better sequence and align information fields with the legislation
Inclusion of new questions, or splitting of existing questions into parts
Increased character limits to enable applicants to provide more information about their R&D activities
Expansion of the number of prefilled questions, including pre-populating certain project and activity information
Revision of some text fields and transition to drop-down lists, buttons and tick boxes to simplify usability.

Importantly, any R&D Applications submitted from 15 August onward will be required to use the new Application Form format and any incomplete Applications saved within the portal will no longer be available from this date.

New R&D Registration Compliance Processes

From 1 July 2025, the DISR has confirmed it has streamlined their R&D activity registration compliance processes to remove duplication and unnecessary steps that can cause confusion and contribute to delays in finalising R&DTI program decisions with applicants.

The new streamlined processes that R&DTI applicants will be subject to going forward includes:

a more efficient approach to conducting examinations which will:
- reduce duplicative requests for information, helping save applicants time and money
delivering decisions around eligibility much sooner,
being more systematic in limiting the use of examinations to circumstances when eligibility risks appear highest,
reducing instances of applications being held ‘in review’ prior to registration, helping to reduce the time it takes to register applications and aligning more closely with DISR’s service level agreements.

R&D time-tracking & salary expenditure requirements

To ensure your R&DTI claim remains compliant and defensible, the ATO is increasingly focusing on time-tracking evidence for R&D personnel. The expectation is that claimants maintain clear, contemporaneous records that demonstrate:

which employees worked on R&D activities
how much time they spent, and
what work they performed.

In light of the increasing compliance activity from the ATO around R&D tax claims, we strongly recommend implementing the following record-keeping practices across your R&D teams:

record time spent on R&D at least monthly for each employee, and
identify a short description of work performed by each employee.

This will place you in a much stronger compliance position than more retrospective methods (such as applying a single percentage estimate applied across a 12-month period) which may no longer be considered sufficient.

R&D Tax Incentive Transparency Report – 2022-23

The second annual R&DTI Transparency Report will be published in September 2025. This will include data regarding R&D claims made in the 2022-23 income year.

In late February, the ATO wrote to all registered tax agents (and directly to entities not represented by an agent) of R&D entities that will have data included in the 2022–23 report. Please ensure you have received this communication from the ATO and contact your registered tax agent if you have any questions regarding the data that will be included in the 2022–23 report.