R&D Tax Facts – 2025 Issue #4

19 Nov

Authors: Shaun van Dijk, Dale Prebble

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.

Application Form Changes

A significantly updated version of the R&DTI application form was officially released by the Department of Industry, Science & Resources (DISR) on 15 August 2025. The new form is now available (and is mandatory) when you are seeking to register your R&D activities via the R&DTI portal for FY25 and beyond.

It is important to note that the eligibility criteria for the program have not changed. However, the ways in which information about the R&D activities need to be described has been significantly changed with new questions and more detail now required.

In the new application form, DISR has:

Increased the character limits for several sections (from 1,000 to 4,000 characters) requiring more detailed responses and fuller explanations for some areas of eligibility.
Expanded the unknown outcomes section into two separate questions with a new question requiring information on the steps taken at the start of the R&D to determine the state of existing knowledge.
Included questions asking applicants to describe the evidence and documentation they keep/plan to keep for their R&D activities.
Included questions to help ensure that R&D activities are being conducted for the benefit, or on behalf, of the applicant.
Clarified the supporting activity dominant purpose test requirements.
Asked applicants to describe the plants and facilities used for their R&D to provide DISR with obtaining a fuller understanding of how R&D is conducted by claimants.

The continued emphasis on documentation makes it clear that good record-keeping continues to be central to how R&DTI applications will be assessed. Addressing this upfront will put you in the best position when completing the new form and in the event that your claim is ever reviewed.

2022-23 ATO R&DTI Transparency Report Released

The ATO has now released the second R&DTI Transparency Report covering the 2022-23 financial year. The report lists the details of R&DTI claimants, including the name of the entity, its ABN or ACN, and the entity's total expenditure on R&D, together with some additional analysis on the ATO's official website.

The initiative aims to enhance transparency, shed light on the benefits derived by companies, and encourage voluntary compliance with the R&D program.

The second report has revealed that 12,596 companies claimed R&D expenditure in the 2022-23 year with 44% of claimants from the professional, scientific and technical services industry. Importantly, Australian owned companies accounted for 93% of the population with 12,055 Australian businesses reporting R&D expenditure.

Important Considerations for YE 31 December 2025 Businesses

For 31 December year end businesses, the end of the 2025 financial year is fast-approaching and it brings with it some important considerations if you are planning to lodge an R&D Tax Incentive claim. We’ve outlined the most important ones below.

Advance Findings: If you’re unsure whether your planned or ongoing R&D activities are eligible under the R&DTI program, an Advance Finding can provide valuable upfront clarity. It’s a binding determination from the regulator confirming whether your activities qualify for an R&D tax offset. It is particularly useful for significant, long-term or complex projects, first-time claimants, or where eligibility of the activities is uncertain. To be valid for the 2025 year, applications must be lodged by the end of your income year (31 December). There are no extensions or exceptions for late applications.
Overseas Findings: Expenditure on overseas R&D activities can only be claimed in specific circumstances. Most critically, to claim any eligible overseas R&D activities in 2025, an Overseas R&D Finding needs to be prepared and lodged by the end of the 31 December. Missing this deadline means you will not be able to claim expenditure on eligible overseas activities for 2025.
Payments to Associates: R&D expenditure that is incurred to an associate can only be claimed for R&D tax purposes to the extent that these amounts are paid within the income year. As such, it’s important to ensure that costs incurred to associates are paid prior to 31 December if you intend to include these amounts in your upcoming 2025 R&D tax claim.
Documentation: It’s important ensure that your documentation is in good order for substantiating any major 2025 R&D activities. Contemporaneous records (i.e. records prepared and collated in preparation for and as R&D activities are being undertaken) should be in place and easily accessible at the completion of the income year to provide evidence for an upcoming R&D tax claim.
Prepaid Expenses: Review the rules around prepaid expenses to determine if they can be included in your R&D claim. Prepaying certain expenses before 31 December might be beneficial, but it's important to understand the specific requirements and limitations that apply.

Upcoming DISR R&DTI Webinars

DISR has announced upcoming R&D tax webinar dates. This includes three R&DTI introductory sessions focused on the basics of the program (20 Nov 2025, 5 Feb 2026 and 20 May 2026).

DISR has also announced a series of upcoming webinars focused on specific topics. This includes:

- Focus on software-related R&D (4 December 2025),

- Applying to register your R&D activities (5 March 2026), and

- Practical knowledge to reduce uncertainty (16 June 2026).

Registration for the webinars can be completed through business.gov.au.

Strategic Examination of R&D Update

The independent strategic review panel has completed the latest phase of its Strategic Examination of Australia’s R&D system with the preparation and progressive release of six separate issues papers (in response to a prior consultation process). The issues papers explore evidence and possible future directions for reform to increase the impact of the research, development and innovation system.

Issues paper 3 specifically addresses how incentives, including the R&DTI program, can be better directed to support growth and achieve greater economic and social impact. The expert panel is now working to deliver the action plan of recommendations to the government.

The issues papers are now closed for comment. The next milestone will be the delivery of an action plan of recommendations to government, completing the strategic examination process.