Australia will overhaul its Research and Development Tax Incentive (RDTI) from 1 July 2028, changing eligibility thresholds, caps and refundability settings for companies claiming R&D support.
During the Federal Budget Announcement, it was specified that changes include raising the refundable offset eligibility threshold from $20 million to $50 million for companies operating less than 10 years. The annual eligible expenditure cap will increase from $150 million to $200 million.
A new 1.5% R&D intensity threshold will apply, requiring R&D expenditure to represent at least 1.5 % of total expenses. A minimum 50,000 project expenditure requirement will also apply. The core R&D offset rate will increase by 25% to 50% for eligible activities.
From 1 July 2028, companies older than 10 years will generally no longer access the refundable offset and will instead access the non-refundable offset. Companies with low R&D intensity relative to total expenses may fall outside eligibility.
Foreign-owned subsidiaries with established Australian operations may transition from refundable to non-refundable offsets. Subsidiaries with mixed operational functions may be affected by the intensity threshold depending on expense allocation. Newer R&D-focused subsidiaries may remain within refundable settings under the revised thresholds.
The new framework applies from the 2028 to 2029 income year, allowing time for companies to assess eligibility, model cash flow impacts, and adjust R&D activity reporting and documentation requirements under the revised regime.
Last updated: 15th May 2026
About the Author
Aaron Garry is the Managing Director of ABN Australia, where he leads the firm’s strategic growth and client service delivery. A Chartered Accountant with deep local and international experience, Aaron has supported hundreds of global businesses in establishing and growing their presence in Australia. His expertise spans market entry, compliance, and commercial advisory.
Aaron Garry
Managing Director