Who can claim
This deduction is available to companies.
- The claimant is an eligible R&D entity. Core activities must use a systematic progression from hypothesis through experiment, observation and evaluation to generate new knowledge where the outcome could not be known in advance.
- A supporting activity must be directly related to a core activity. If it produces goods or services, directly relates to production or is otherwise listed by the legislation, its dominant purpose must be supporting the core activity.
- The activities are registered with AusIndustry for the income year and the claimed notional deductions relate to those eligible activities.
- Total eligible notional deductions are at least $20,000, unless the below-threshold amount is eligible expenditure to a non-associated registered research service provider or an eligible Cooperative Research Centre contribution.
- The company completes the applicable R&D incentive schedule and company tax return labels.
What you cannot claim
- Registration does not by itself make an activity or expenditure eligible.
- Ordinary business activity, ineligible expenditure and unsupported overhead allocation must not be included.
- Expenditure to an associate generally cannot produce the notional deduction until it is paid.
- An amount used as a notional R&D deduction is not also claimed as an ordinary business deduction.
How the amount is worked out
Classify eligible activities first and calculate the related notional deductions. If aggregated turnover is below $20 million and the entity is not controlled by exempt entities, the refundable offset rate is the corporate tax rate plus 18.5 percentage points. Otherwise, the non-refundable offset starts with the corporate tax rate and adds an 8.5% premium for notional deductions up to 2% of total expenses and a 16.5% premium above that intensity. For notional deductions above $150 million, the excess receives only the corporate tax rate. Apply the below-$20,000 exceptions, associate-payment rule, feedstock, recoupment and other integrity adjustments before completing the schedule.
Records the ATO expects
- AusIndustry registration
- Activity and experiment records
- R&D expenditure ledger
- Apportionment method
- Aggregated turnover and total expenses
- R&D incentive schedule
Before you rely on this rule
This is a tax-offset review, not an ordinary expense deduction. It remains outside the worksheet deduction total.
Where this rule comes from
Primary source: ATO research and development tax incentive (Modified 12 May 2026). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.