Updated RDTI Guidance for Agrifood – Animal Production Claims and the Line Between Benchmarking and R&D
Authors: Matthew McLean, Shaun van Dijk
The Department of Industry Science and Resources (DISR) has recently updated its sector-specific guidance for the Agrifood sector. The new R&D Tax Incentive (RDTI) guidance provides a set of common risk areas and three worked examples covering feed formulation trials, ingredient substitution and the difference between confirmatory testing and genuine hypothesis-led experimentation.
This supplements some prominent recent disputes on the eligibility of animal production-related R&D activities and is intended to better define the ‘eligibility bar’ that claimants must clear to establish that the outcomes of R&D activities were unknown.
Recent RDTI disputes in animal production
Animal and agrifood production are industries where innovation is being pursued in areas like feed composition, husbandry or production conditions, to improve outcomes like growth rate, yield, survival or feed conversion. Projects of this nature have become the subject of recent public dispute with the ATO in both the Administrative Appeals Tribunal and the media.
GQHC and Commissioner of Taxation [2024] AATA 409 was a February 2024 Administrative Appeals Tribunal decision involving a poultry farming operation. GQHC had registered activities across four projects covering incubation and hatchery processes, water quality, shed cleaning and broiler improvement. This was work that DISR had reviewed in prior years without objection.
In 2023, the ATO reviewed the claim and challenged not just the eligibility of the identified R&D expenditure, but also whether the underlying activities were eligible R&D activities at all, representing a new area of contention for the ATO in RDTI disputes. The Tribunal agreed with the Commissioner in its finding that none of the projects met the core R&D activity definition, which therefore prevented R&D expenditure being claimed entirely.
Since then, the media has reported on Inghams Group's ongoing RDTI dispute with the ATO. In August 2025, the ABC reported it as a fight now in its sixth year centring on more than $50 million in R&D tax claims relating to poultry production, with the ATO pursuing significant amendments to these prior claims across the 2019-2021 income years. Inghams has indicated it will defend its position and take the matter to court if required. Whatever the eventual outcome, the case signals that large-scale RDTI claims in animal production are squarely on the ATO's radar.
Read together, the Inghams and GQHC cases describe an environment where animal production, and agrifood RDTI claims more broadly, face a current and growing risk of retrospective challenge on eligibility. Importantly, this risk of ATO challenge exists despite DISR / AusIndustry sign-off and registration in earlier years given the ATO’s approach in GQHC of challenging R&D activity eligibility retrospectively, not just reviewing expenditure entitlements.
Items to highlight in the updated RDTI agrifood guidance
In our view, there are two important items to highlight from the updated RDTI agrifood sector guidance as key considerations businesses seeking to access the RDTI to support their projects:
How the requirement that the outcome of R&D ‘could not be known or determined in advance’ will be practically applied.
How new ingredient R&D activities and routine testing scenarios in agrifood projects will be viewed in terms of core activity eligibility.
1. Outcome could not be known in advance
The first new hypothetic example in the updated guidance is a feed trial for dairy cattle. The case study is built around a critical eligibility test that applies to all RDTI claims in all industries – i.e. that the outcome of an activity "could not be known or determined in advance" by a competent professional using current knowledge, information or experience.
In the example, a company wants to lift milk production in early lactation dairy cattle. Before running any trial, it consults published industry body guidance stating that raising crude protein from 12-13% to 16-17% typically increases milk production by 5-20%, and that further increases beyond that range don't produce additional gains. Armed with this information, the company runs a well-designed comparative trial that includes a control group at existing protein levels and a treatment group at 16%, run over 16 months. The trial returns a 12% uplift, comfortably inside the published range.
In this example, DISR suggests that the study does not meet the requirements of a core R&D activity. DISR explicitly accepts that the exact uplift/impact, dependent on individual animal physiology, couldn't have been predicted. However, what prevents eligibility is that a known range had already been published, and the trial result fell within it. As such, the trial is viewed as confirming existing knowledge rather than generating new knowledge.
In animal production terms, you might call this the difference between a confirmatory or benchmarking trial (designed to verify that a known, published relationship holds under your own conditions), and a genuine R&D activity, where the outcome cannot be determined from existing knowledge.
The example provides the following important insights in DISR assessment of core R&D activity eligibility for agrifood claimants:
First, the test that will be applied when assessing whether the outcome could have been predicted will concern definable ranges, rather than exact figures. The existence of a published range may be enough to prevent eligibility of the trial, even where the precise result within that range was genuinely unpredictable. If a competent professional could already confidently state that "the outcome will land somewhere in this band," the activity may be deemed ineligible.
Trial rigour, in and of itself, is not determinative of eligibility. The dairy cattle trial examples has hallmarks of credible scientific endeavour like a control arm, adequate sample size, a defined trial period and statistical analysis. However, per the example, this does not persuade DISR that the outcome was unable to be predicted in advance. Undertaking the R&D activity via a systematic progression of work is only one criteria for a core R&D activity with the other criteria still needing to be satisfied to demonstrate eligibility.
2. Feed formulation and routine testing & monitoring activities
The updated agrifood guidance incorporates updated commentary on new ingredient R&D and routine testing (which is excluded from qualifying as a core R&D activity) and demonstrates how these types of activities will be interpreted in agrifood and animal production contexts.
In terms of new ingredients or novel feed inclusions, DISR indicates in the guidance that it expects the manufacturer's product information file (PIF) to have been reviewed, and states this expectation applies "regardless of whether the PIF specifies a single value or a range of values for use."
In terms of routine testing activities, the updated guidance is explicit that activities conducted to support production, check compliance or monitor quality don't meet the core R&D test on their own because they don't aim to resolve a technical uncertainty. It names feed composition analysis directly, alongside nutritional testing, contaminant testing and salinity/moisture testing, as examples. These remain potentially eligible, but only where they are genuinely part of, or in support of, an eligible core activity, rather than as a standalone core activity for testing or monitoring.
Practical takeaways for agrifood claims
The new agrifood sector RDTI guidance, together with the current compliance environment, provides helpful direction to companies considering whether their animal production or agrifood R&D activities align with the RDTI program requirements. In our view, the following should be key considerations:
Exhaust the available literature in support of identifying the existing knowledge & uncertainty. Companies should consult industry body guidance, supplier PIFs, breed/strain nutritional standards, and published trial data specific to the species, production system & conditions involved and ensure the outcomes of this analysis is used to clearly define the uncertainty or knowledge gaps at the outset of the R&D. The existence of a documented range of expected outcomes may be enough to prevent R&D activity eligibility even where the precise result remains unknown.
Locate and evidence the technical gap precisely. The strongest RDTI claims are able to specifically identify what sources of information were consulted (industry body, nutritionist, veterinary or animal science expert), what these sources state, and why there remains a genuine gap that existing knowledge couldn't close, rather than general assertions that livestock biology is variable or that the same results that have been seen before can't be guaranteed.
View prior R&D activity registration as no guarantee, and cost eligibility as a separate question from activity eligibility. The GQHC case shows that the ATO can and will revisit R&D activity eligibility independently of DISR, and that this can happen after years of unchallenged claims. Feed-related claims also carry a feedstock adjustmentdimension distinct from activity eligibility which needs to be considered and applied correctly.
Consider an Advance Finding for higher-value claims. Advance Findings are a separate RDTI process available to taxpayers that provides a means of securing upfront assurance from DISR that registered R&D activities will be eligible. While most claimants elect to self-assess when preparing annual claims, for a large-scale, multi-year feed or husbandry program where the eligibility case is genuinely arguable, the processing time and preparation cost is modest against the retrospective exposure that both the GQHC and Inghams cases illustrate. We’ve written about the pros and cons of Advance Findings here.
In summary, the underlying message, from the updated RDTI guidance, and from the case law alike, is that RDTI eligibility has to be carefully considered and built upon a clear understanding of what the current evidence base doesn't already answer. The existing knowledge base must be assessed and documented with the same rigour that is used to record the experimental work itself and the results achieved in order to withstand scrutiny by the regulators.
Please reach out if you have any questions about the updated agrifood guidance, or if you are keen to understand how your agrifood R&D activities align with the RDTI requirements.