The R&D Tax Incentive Process
A step-by-step guide to making an RDTI claim - from registration to refund.
Is the R&D Tax Incentive Right for Your Business?
If your company conducted R&D activities this financial year and met the $20,000 minimum spend threshold, you may be entitled to a tax offset, or a cash refund if your turnover is under $20 million.
Claiming it means dealing with two government agencies, strict deadlines, and detailed documentation. Miss a step and you can lose the claim entirely.
Below is the complete process, from eligibility through to receiving your offset.
The R&D Tax Incentive Claims Process
The R&DTI is jointly administered by AusIndustry (Department of Industry, Science and Resources) and the Australian Taxation Office (ATO). You must engage with both agencies to successfully claim.
Step 1: Self-Assess Eligibility & Document Activities
Before you can claim, you must self-assess whether your company and activities meet the eligibility requirements.
Your company must:
- Be incorporated under Australian law (or a foreign corporation in some circumstances)
- Have conducted eligible R&D activities
- Have at least $20,000 in notional R&D deductions
Your R&D activities must involve:
- Core R&D: Experimental activities where the outcome cannot be known in advance based on current knowledge
- Supporting R&D: Activities directly related to core R&D activities
Step 2: Register with AusIndustry
Agency: AusIndustry (Department of Industry, Science and Resources)
Deadline: Within 10 months after the end of your income year (e.g., 30 April for standard June year-end).
Register your R&D activities through the R&D Tax Incentive customer portal. You'll receive a unique registration number that must be included in your tax claim.
Your registration must describe:
- Each core R&D activity and the technical uncertainty being addressed
- The experimental approach used
- Supporting R&D activities and how they relate to core activities
Step 3: Calculate Eligible R&D Expenditure
Calculate all expenditure that is directly attributable to your registered R&D activities.
Eligible expenditure typically includes:
- Salaries and wages - apportioned for time spent on R&D
- Contractor payments - for R&D services (some limitations apply)
- Materials and consumables - used in R&D activities
- Depreciation - on assets used for R&D
- Overhead costs - if directly attributable and supported by records
Step 4: Complete the R&D Tax Incentive Schedule
Agency: Australian Taxation Office (ATO)
Use the ATO's R&D Tax Incentive calculator to complete the R&D Tax Incentive Schedule. This schedule calculates your tax offset based on:
- Your company's aggregated turnover
- Whether exempt entities control your company
- Your total eligible R&D expenditure
- Whether you're entitled to a refundable or non-refundable offset
You must include your AusIndustry registration number on the schedule before lodging.
Step 5: Lodge with Your Company Tax Return
Agency: Australian Taxation Office (ATO)
Submit the R&D Tax Incentive Schedule together with your company tax return. Your tax agent typically handles this lodgement.
Ensure consistency: The information in your tax return must be accurate and consistent with what you submitted to AusIndustry. Both agencies share information and conduct complementary compliance activities.
Step 6: Receive Your R&D Tax Offset
The ATO processes your return and determines your offset. The type of offset you receive depends on your circumstances:
Refundable Offset
For companies with aggregated turnover under $20 million that are not controlled by exempt entities. You receive a cash refund even if in tax loss.
Non-Refundable Offset
For larger companies or those controlled by exempt entities. The offset reduces your tax liability or can be carried forward to future years.
Processing time: Refunds are typically processed within 2-4 weeks of your return being assessed, unless selected for review.
Key Deadlines You Cannot Miss
| Deadline | What's Required | Consequence of Missing |
|---|---|---|
| 10 months after FY end | AusIndustry registration | Claim rejected entirely |
| Tax return deadline | Lodge R&D Tax Incentive Schedule | Cannot claim offset for that year |
| Within 4 years | Amendment period (if you need to correct a claim) | Cannot amend after 4 years |
What Happens If Your Claim Is Reviewed?
The ATO reviews approximately 20-30% of all R&D claims, especially first-time claimants and high-value claims.
The Review Process:
- ATO sends a notice requesting additional evidence and documentation about your registered activities and claimed expenditure.
- You have 28 days to respond (extensions may be granted if requested in advance with reasonable cause).
- The reviewing agency assesses your evidence. They may request further clarification, interviews with technical staff, or site visits.
- Outcome: Claim approved, reduced, or disallowed. You have rights to object and appeal.
What the ATO Looks For:
- Evidence of hypothesis-driven experimentation
- Technical documentation (project plans, test results, meeting notes)
- Evidence that expenditure was directly attributable to R&D
- Timesheets or other records showing time spent on R&D
- Expert reports or independent validation of technical uncertainty
How Long Does the ATO Take to Process Your R&D Tax Refund?
For companies receiving a refundable offset (aggregated turnover under $20 million), the cash refund is typically paid within 2 to 4 weeks of your tax return being assessed. Electronic lodgement via a registered tax agent is the fastest path through.
This assumes your return is straightforward and not selected for review. In practice, most refunds arrive within this window once the ATO completes its assessment.
What Can Delay Your Refund
- Selected for RDTI compliance review - The ATO reviews around 20 to 30% of claims. If selected, processing pauses until the review is resolved, which can take several months to over a year for complex cases.
- Errors or inconsistencies in the return - Mismatches between your AusIndustry registration and the RDTI Schedule will trigger manual checking by the ATO.
- Outstanding tax debts - The ATO may offset your refund against any existing tax debts before paying the remaining balance.
- Paper lodgement - Paper returns take significantly longer to process than electronic lodgements through a registered tax agent.
If Your Refund Is Taking Longer Than Expected
Check your return status through ATO online services or your tax agent. If your return has been assessed but no refund has been issued, contact the ATO directly to confirm your payment details are correct and whether your claim is under review.
If your claim has been selected for compliance review, engaging an experienced RDTI consultant to manage the response is the fastest way to resolve it and protect your refund amount.
Common Process Mistakes That Sink Claims
❌ Missing the 10-Month Deadline
The most common reason claims fail entirely. Set reminders and start early.
❌ Poor Activity Descriptions
Vague or generic descriptions lead to rejection. AusIndustry needs to understand what you did and why it was uncertain.
❌ Inflated Expenditure Claims
Claiming 100% of salaries when only 30% of time was spent on R&D raises red flags. Be honest and accurate.
❌ No Supporting Documentation
If you can't prove you did R&D when the ATO asks, your claim will be reduced or disallowed.
See our ATO and AusIndustry review guide for what happens if your claim is examined. Questions about fees? See our pricing page. Or browse all frequently asked questions →
How We Support Clients Through the Process
The RDTI process is complex and high-stakes. We guide you through every step to maximize your claim and minimize risk.
📋 Eligibility Assessment
We review your activities before registration to ensure they meet RDTI criteria.
✍️ AusIndustry Registration
We draft technical narratives that clearly explain your R&D and address potential concerns upfront.
💰 Expenditure Calculation
We work with your accountant to ensure expenditure is accurate, defensible, and maximized.
🛡️ Review Defence
If the ATO reviews your claim, we respond on your behalf with evidence and technical justification.
Don't Navigate This Process Alone
Get expert guidance from eligibility assessment to ATO review defence.
Start Your ClaimGet in Touch
Have questions about the RDTI process? Contact us for a free consultation.