The R&D Tax Incentive in 2026 — Current Rules and the 2028 Reforms Founders Should Know About
The R&D Tax Incentive in 2026 — Current Rules and the 2028 Reforms Founders Should Know About
The R&D Tax Incentive (R&DTI) is one of the most valuable ongoing programs available to Australian companies undertaking experimental work. The 2026–27 Federal Budget announced significant reforms — but they don't take effect until 1 July 2028, which means the current rules still apply for the next two years. Here's what that looks like in practice, and how KP Retail thinks about it.
How the R&DTI works today
The R&DTI is administered jointly by AusIndustry and the ATO. Companies self-assess eligible R&D activities, register them with AusIndustry, and claim the offset through their company tax return. Registration must happen within 10 months of the end of the income year in which the R&D activity took place — for companies with a 30 June year-end, that's a 30 April deadline the following year.
Under current rules, the benefit is structured as a refundable tax offset (corporate tax rate plus 18.5%) for eligible companies with aggregated turnover below $20 million, and a non-refundable offset (corporate tax rate plus a premium tied to R&D intensity) for everyone else.
What's changing from 1 July 2028
The 2026–27 Budget announced several reforms. The refundable threshold lifts from $20 million to $50 million in aggregated turnover, opening refundability to more mid-sized businesses. However, refundability will be limited to companies under 10 years old. The maximum expenditure cap rises from $150 million to $200 million, and the minimum threshold rises from $20,000 to $50,000 (with activity below that level only eligible if undertaken with a registered Research Service Provider).
Offset rates on core R&D expenditure increase by 4.5 percentage points — but supporting activities (administrative tasks, literature reviews, equipment maintenance) lose eligibility. The intent is to concentrate the program's value on genuinely experimental work.
Until 1 July 2028, current rules apply. Anything you're claiming for FY2025–26 and FY2026–27 sits under the existing framework.
Founder tips that matter regardless of which rules apply
The R&DTI rewards businesses that document genuine technical uncertainty. Records should show what you didn't know going in, what hypothesis you tested, what experiments you ran, and what results you got. A polished narrative without underlying records is where most claims unravel under review.
Build the documentation habit in real time, not at year-end. Sprint planning notes, technical decision logs, failed experiments, test results — these become the substantiation file. Trying to reconstruct twelve months of experimental work in April for a 30 April deadline is brutal.
Be honest about the line between R&D and routine development. Iterating on a known approach using existing knowledge isn't R&D, even if it's hard work. R&D requires genuine technical uncertainty that couldn't be resolved by consulting public sources or competent professionals in the field.
Where KP Retail fits in
At KP Retail we work alongside accountants and registered tax agents to help businesses think about how grants and the R&DTI sit alongside each other — particularly around avoiding double-dipping where the same expenditure could be captured under multiple programs.
We don't lodge R&D claims (that's the territory of registered R&D consultants and tax agents), but we frequently help businesses understand whether their broader funding mix is making sense, and whether they're positioning themselves to benefit from both the current rules and the upcoming reforms.
The R&DTI is a substantial program, and the 2028 reforms are significant enough that they're worth thinking about now. If you're trying to understand how your business sits across the R&DTI, grants, and broader funding options, talk to KP Retail. We'll help you map the picture clearly. Nothing in this article is tax advice — your registered tax agent is the right person for that conversation, and we work in parallel with them.
Related reading: If you're deciding between R&D and grant funding, see our comparison of R&D tax incentive vs grants. For programs that may complement the R&D Tax Incentive, see our guides to CSIRO Kick-Start and the Industry Growth Program. KP Retail can help you navigate the R&D Tax Incentive and identify complementary grants.
