R&D Tax Incentive (Australia)

TL;DR

Australia's flagship R&D tax credit: 43.5% refundable offset on qualifying R&D for companies with under A$20M turnover, paid as cash to startups.

The R&D Tax Incentive (RDTI) is Australia's flagship innovation tax credit, jointly administered by AusIndustry and the ATO. Companies with annual aggregated turnover under A$20M get a 43.5% refundable tax offset on qualifying R&D expenditure — meaning the R&D spend ×43.5% is paid as a cash refund if the company is loss-making. Companies above A$20M get a 38.5%–46% non-refundable tax offset that reduces future tax payable.

For early-stage Australian SaaS, biotech, and deep-tech startups, RDTI is the single largest non-dilutive funding source — typical refunds of A$200–600k for a Series A-stage company. The application process requires registering R&D activities with AusIndustry within 10 months of year-end and lodging the R&D Tax Schedule alongside the company's tax return.

Formula

RDTI Cash Refund = Qualifying R&D Expenditure × 43.5%

• Qualifying R&D Expenditure — Eligible R&D staff salaries, supplies, and contract R&D incurred during the income year
• 43.5% — Refundable tax offset rate for entities with aggregated turnover under A$20M

Net cash benefit ≈ qualifying spend × (43.5% − company tax rate) for loss-making SMEs.

Worked example

A Sydney SaaS startup spends A$1.1M on engineering R&D in FY2024. As a loss-making SME under A$20M turnover, RDTI returns A$478,500 (1.1M × 43.5%) as a cash refund 4 months after lodging — funding ~5 months of additional runway against a A$100k/month burn.

Common pitfalls

• Claiming activities that fail the 'core' or 'supporting' R&D activity tests on AusIndustry audit.
• Waiting until lodgement deadline and missing the AusIndustry registration — no registration, no offset.
• Including non-eligible costs (sales, marketing, financing) and triggering an integrity review.

When this shows up in a pitch deck

Australian Series A decks list RDTI in the runway calculation: 'A$450k refundable RDTI in Q3 funds 4 months of additional runway'.

Related terms

• ESVCLP — Australia's tax-advantaged VC fund structure granting fund-level tax exemption and a 10% non-refundable carry tax offset for LPs — used by most AU VCs.
• Pty Ltd (Australia) — Australia's standard private-company structure — at least one Australian-resident director, no minimum share capital, ASIC-registered. Default for AU VC.
• CIR (Crédit d'Impôt Recherche) — France's research tax credit: 30% refundable credit on the first €100M of qualifying R&D spend per year, paid as cash to loss-making startups.
• R&D Tax Credits (UK) — Two HMRC schemes (SME and RDEC) refunding a percentage of qualifying R&D spend in cash or as a CT credit — often £30–80k for early-stage UK startups.
• Runway — The number of months the current cash balance will last at the current net burn rate before the company runs out of money.

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