R&D Tax Offset Calculator

How the R&D Tax Incentive works

The R&D Tax Incentive encourages Australian companies to invest in research and development by providing a tax offset above the normal deduction rate. For companies with turnover under $20 million, the offset is 43.5% (refundable) - meaning you effectively get 18.5 cents back on every dollar spent on eligible R&D above what you would receive as a normal tax deduction. For larger companies, the non-refundable offset is 8.5 percentage points above your company tax rate.

Eligible R&D activities must involve systematic experimentation or investigation to generate new knowledge or create new or improved materials, products, processes, or services. Both core R&D activities and supporting activities can qualify, but they must be registered with AusIndustry within 10 months of the end of the income year.

How to use this R&D tax offset calculator

1. Enter your company's aggregated turnover to determine whether you qualify for the refundable (under $20M) or non-refundable offset.
2. Enter your total eligible R&D expenditure for the financial year, including labour, contractor costs, materials, and overheads directly attributable to R&D activities.
3. The calculator shows the gross offset value, the net benefit above a normal tax deduction, and the effective cost of your R&D after the incentive.
4. Use the results to compare the return on different R&D investment levels and plan your annual R&D budget.

R&D Tax Incentive compliance in Australia

The R&D Tax Incentive is jointly administered by AusIndustry (which assesses the eligibility of activities) and the ATO (which assesses the expenditure claims). Companies must register their R&D activities with AusIndustry before lodging their tax return, and the registration must describe the core and supporting activities in sufficient technical detail. The ATO has increased compliance activity in recent years, with a focus on the nexus between claimed expenditure and registered activities. Common audit triggers include high R&D intensity ratios (R&D spend as a proportion of turnover), claims for overseas R&D without an advance overseas finding, and inconsistencies between the AusIndustry registration and the amounts claimed in the tax return. Maintaining contemporaneous records - including project plans, experiment logs, and invoices coded to specific R&D activities - is essential for defending a claim under audit.

How does AP automation help with R&D claims?

R&D claims require detailed records of all expenditure allocated to eligible activities. When supplier invoices for contractors, materials, and services are processed manually, R&D costs can be missed or incorrectly allocated. Automating accounts payable ensures every invoice is captured, coded to the correct R&D project, and ready for your R&D tax adviser at year end - reducing both the risk of under-claiming and the risk of an ATO compliance finding.