R&D Tax Facts 2026 Issue #1
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.
Don't Forget to Register for the R&DTI
For 30 June year end businesses, the registration window for FY2025 R&DTI claims will close in less than 2 months. A key requirement of the R&DTI program is that R&D activities are registered within 10 months of the end of the income year in which the activity took place. As a result, for those entities with a 30 June year end, the key date for R&D undertaken in the 2025 income year is Thursday 30 April 2026.
If you are planning to claim the R&DTI via your income tax return for FY2025, the first step is to register your eligible R&D activities through the R&DTI customer portal prior to this strict deadline.
To assist, see below some important considerations as this deadline fast-approaches:
Setup or check your R&DTI customer portal authorisation access
To submit registrations through the portal you must be authorised. The process for setting this up depends on your relationship to the applicant company. If you have already configured authorisations, check whether they have expired. You can review and update portal access through the Relationship Authorisation Manager.Make sure the head entity is registering activities
For consolidated groups, the head entity must register R&D activities for itself and all subsidiaries that form part of the tax consolidated group. If a subsidiary conducts R&D outside the consolidated group, it must register separately. Using the wrong entity’s ABN in the portal may lead to your application being withdrawn.Read the application form guidance before you begin
Signficant changes to the process of registering R&D activities were made in August 2025. As a result, the scope of information that needs to be submitted has been expanded with new questions in the Application Form. We recommend reviewing the R&D Application Form guidance material before starting your application to ensure you understand the questions asked and the information that needs to be provided.
We recommend acting now given the time and scope of information needed to complete R&D activity registration. Acting now will help ensure a smoother registration process and give you more time to address any issues you encounter ahead of the 30 April deadline.
Advance Findings: Certainty Before You Claim
Advance Findings provide a valuable tool for companies seeking clarity on the eligibility of planned or ongoing R&D activities. They are binding determinations from the regulator confirming whether your activities will qualify for an R&D tax offset.
While Advance Findings have always been useful for significant, complex or first-time projects, recent increases in regulatory scrutiny and audit activity in the R&DTI program provide another reason to consider whether an Advance Finding can provide you with greater certainty over your R&DTI entitlements and be used to mitigate compliance risk.
In addition to clarity for audit readiness, Advance Findings can also be valuable for strategic planning, capital raising or when seeking external financing, providing confidence that your R&D activities are recognised as eligible before you invest heavily or make financial commitments.
Advance Findings need to be submitted prior to the end of the financial year in which the R&D is being conducted (i.e. by 30 June). If secured, the finding then applies to the current year, as well as two future income years. As such, now is the time to consider preparing an Advance Finding to cover R&D activities related to the FY2026 as this will need to be submitted no later than 30 June 2026.
For more information on Advance Findings and their value as part of a comprehensive R&DTI strategy, see this article that we previously published.
Gambling and Tobacco Exclusion: Update on the legislation status
The Government has released draft legislation that proposes to exclude R&D activities related to gambling, tobacco and nicotine products from eligibility under the R&D Tax Incentive for income years starting on or after 1 July 2025. These changes reflect a policy intent to ensure taxpayer funding does not support R&D that may exacerbate addiction or adverse health outcomes.
Under the draft legislation:
R&D activities connected to gambling services, gambling or gambling-like practices will be ineligible for the R&DTI.
Tobacco, nicotine products and related activities will similarly be excluded.
A carve-out remains where R&D is conducted solely for the purpose of harm-minimisation (for example, research into reducing addiction or health impacts), which can still qualify for the incentive.
Submissions on the exposure draft closed in January 2026 and the Government is expected to shortly introduce the final bill following the completion of the stakeholder consultation process.
Understanding the Risks of R&D Loans
The issue of R&D loans and financing was highlighted in a recent Department of Innovation, Science & Resources (DISR) alert emphasising the importance of risk awareness when planning finance strategies around expected R&D tax offsets.
Many Australian companies use short-term finance, such as loans, to secure an advance of their expected R&D tax offset refund. While this can assist with cashflow, it is important to understand the risks and ensure you are aware of the regulator's expectations of these arrangements.
The R&DTI is only available for eligible R&D activities and expenditure. Both DISR and the ATO may review your activities and claimed expenditure to ensure they meet the legislative requirements. If your activities or costs are later found to be ineligible, and you have borrowed against an anticipated refund, your business may be left with debt that cannot be covered by a tax offset. Some considerations highlighted in the DISR alert are provided below:
Rigorously self-assess your eligibility before committing to finance
Maintained detailed, contemporaneous records regarding your R&D activities
Understand that registration does not confirm eligibility, and that your claim might still be subject to review at a later time
Consider an Advance Finding or private ruling to provide confidence in your eligibility before committing to financial arrangements (see our summary of the Advance Finding process above).
We provide assurance support to companies seeking to access advanced R&D financing and can provide a high degree of rigour regarding your entitlements to minimise any risks that your activities or costs will be found ineligible.
Please contact us if you’re keen to explore the RDTI program further.