Applications for registration of R&D activities due 30 April 2026

Applications are now closed for the registration of R&D activities for both the financial years ended 30 June 2024 and 31 December 2024.

An important reminder that the deadline to lodge an R&D claim for the year ended 30 June 2025 is fast approaching, with applications for the registration of R&D activities due by 30 April 2026.

Please note the deadline to lodge remains 10 months following the conclusion of your financial year end.

If you’d like to explore how BDO can help with your claim, please contact our R&D and government incentives team.

Planning for 30 June 2026 R&D claims

The end of the 2026 financial year is fast approaching. As you prepare for your end of year activities, here are some key considerations when it comes to R&D activities:

R&D documentation

Make sure your R&D documentation is thorough and up to date. Whilst recent case law has affirmed that specific supporting documentation is not a legislative requirement, it is highly beneficial in substantiating your claims and demonstrating compliance with the legislative criteria.

The maintenance of appropriate contemporaneous documentation remains an area of regulatory scrutiny during the review process.

Are you claiming in the correct entity?

In late 2023, the Australian Tax Office (ATO) released Taxpayer Alert 2023/4 Research and development activities delivered by associated entities. In this alert, the ATO describes common ‘higher risk’ structures as outlined below.

The ATO’s current focus revolves around claims made by R&D entities for expenditure incurred under an agreement with an associate of the R&D entity (the ‘Service Provider’) who itself conducts the R&D activities.

In particular, the ATO is concerned with arrangements that:

• Incorrectly purport the R&D entity as having incurred or paid (or both) the relevant expenditure under an agreement with the Service Provider; or
• Have the effect of obtaining for the R&D entity a tax offset for expenditure on R&D activities purportedly conducted for the R&D entity's own benefit but are instead in substance being conducted for (or to a significant extent, for) the Service Provider.

While it is common and usually prudent to separate the Intellectual Property (IP) from the trading activities of a business, this can cause complexity where the entities are not consolidated for income tax. For example, the ATO has identified concerns when all income and expenses are initially recognised in the trading entity and subsequently recharged to the IP entity (the claimant R&D entity). This is typically justified on the basis that the R&D activities are conducted for the IP entity, despite there being no commercial arrangement in place for the IP entity to exploit the benefits of the R&D results. Even where there are commercial arrangements entered into by the relevant parties, the ATO is concerned where the legal agreements appear to be inconsistent with the actual commercial substance of the arrangement.

Complexities associated with claimants operating within broader trust structures have similarly been emphasised by the Full Federal Court’s affirmation of the AATA’s 2022 decision in XQDX v Commissioner of Taxation.

Payments to associates

Further to the above, if you are looking to include payments to associates in your claim, you will need to demonstrate that these amounts were in fact paid prior to 30 June and not just incurred. Payment can include constructive payments, for example, through the offsetting of a loan where there are mutual obligations between the parties and the loan is documented and reflect appropriate commercial terms. As this is a key focus area of the ATO, we recommend seeking advice if your R&D expenditure is comprised in some part of payments to associates.

Advance and Overseas Findings

Consider whether you would like to lodge an Advance or Overseas finding.

Criteria for Overseas Finding

If you are looking to claim any overseas expenditure in 2026, it must be covered by an Advance Overseas finding.

In order to receive an Advance Overseas Finding, you must apply to DISR (AusIndustry) by 30 June 2026 and be able to demonstrate that:

• The overseas activity was unable to be conducted within Australia due to at least one of the four legislated circumstances
• The activity has a significant scientific link to one or more eligible core R&D activities conducted solely in Australia, and
• Over the life of the activities, you will spend more in Australia than overseas.

Overseas Findings are valid for the life of the activity, provided the activities do not materially change from those described in the approved finding certificate.

Benefits of an Advance Finding

Although Advance Findings are not a mandatory requirement of the program, they can provide critical certainty by binding the Commissioner of Taxation regarding the eligibility of your R&D activities. In the absence of a finding, claims may be subject to lengthy reviews or outright rejection. With one in place, claimants can proceed with confidence that eligibility will not be revisited, except under extraordinary circumstances.

To this end, Advance Findings can assist in planning and budgeting for future R&D projects. They can also help secure funding and investment by demonstrating government support for your R&D activities.

Strategic Examination of Research and Development (SERD) and associated program changes

The Australian Government announced it would commence undertaking a strategic examination of our research and development (R&D) system as part of the 2024-25 Federal Budget.

This examination has since commenced, already resulting in a formal submission to the federal government concerning the identification and potential resolution of perceived key issues with the R&D Tax Incentive (RDTI) system. These recommendations were made with reference to public submissions by stakeholders, including BDO.

SERD has occurred in parallel with:

• A new R&D application form that came into effect on 15 August 2025:
  • The new form places a greater burden on the claimant to provide more detail regarding their activities, with the expectation that this will reduce the need for regulator inquiries
  • The ATO has explicitly stated that this is part of a broader effort to streamline reviews and focus on higher risk cases.
• Continued publishing of R&D claimants total R&D expenditure, a practice enforced as part of broader transparency measures in effect since October 2024.
• Proposed gambling and tobacco exclusions announced in the Mid-Year Economic & Fiscal Outlook MYEFO):
  • The Federal Government announced its intention to exclude activities related to gambling and tobacco from the RDTI for income years starting on or after 1 July 2025
  • Eligible R&D entities in these sectors will still be able to claim activities conducted solely for the purposes of harm minimisation, such as reducing addiction
  • The legislative status of these measures is unclear, with submissions regarding the draft legislation having closed 30 January 2026.

How BDO can help

Our R&D & government incentives team has significant experience assisting in the preparation of R&D tax incentive claims. Contact us for advice in relation to your application.