How to Prepare Your FY26 R&D Tax Incentive Claim

Applications for FY26 Research and Development Tax Incentive claims are now open. Whether this is your first claim or you have applied before, the fundamentals remain the same: your company, activities, expenditure and records must meet the program’s eligibility requirements.

At FundFindrs, we work with businesses conducting research and development across manufacturing, engineering, robotics, clean technology, pharmaceutical development, software, artificial intelligence and other technical sectors.

The same R&DTI rules apply regardless of your industry, company size or previous claim history. This guide explains those rules and the practical steps you can take to prepare a stronger FY26 claim.

• Key takeaways

• Confirm your company is eligible

• Assess each R&D activity

• Keep records while the work is happening

• Separate and track eligible expenditure

• Understand the two parts of the claim

• R&DTI changes announced for 2028

• Final thought

• Frequently asked questions

Key takeaways

• FY26 R&DTI applications opened on 1 July 2026.

• Companies with a standard 30 June income year generally have until 30 April 2027 to register their FY26 activities.

• The current refundable offset for eligible companies with aggregated turnover below $20 million is their company tax rate plus 18.5 percentage points. This can produce an offset of up to 43.5%.

• The general minimum eligible R&D expenditure remains $20,000 for FY26, although exceptions can apply when eligible work is conducted through a registered Research Service Provider or the Cooperative Research Centres Program.

• The eligibility criteria apply to every claimant, whether this is the company’s first claim or part of an established R&D program.

• Strong records must connect each registered R&D activity with the expenditure claimed against it.

• Changes announced in the 2026 Federal Budget are intended to apply from 1 July 2028. They do not change the rules for FY26 claims.

1. Confirm your company is eligible

To claim the R&DTI, your company must qualify as an eligible R&D entity.

This generally means it must be:

• A corporation incorporated under Australian law

• A corporation incorporated under foreign law that is an Australian resident for income tax purposes

• A foreign corporation that is resident in a country with an appropriate double tax agreement and carries on business in Australia through a permanent establishment

Individuals, sole traders, most partnerships and most trusts cannot claim the R&DTI in their own right.

Your company must also conduct eligible R&D activities and incur eligible expenditure. In most cases, the company needs at least $20,000 in eligible R&D expenditure during the income year.

These requirements do not change because a business has claimed before. What can change is the company’s aggregated turnover, ownership, activities or expenditure, which may affect its eligibility and offset.

2. Assess each R&D activity against the eligibility criteria

The R&DTI supports eligible activities undertaken to resolve technical uncertainty through a systematic progression of work. It does not apply simply because a project is new, innovative, expensive or commercially risky.

Eligibility is assessed at the activity level, not across an entire project.

Core R&D activities generally involve experiments whose outcomes could not have been known or determined in advance based on current knowledge, information or experience. The purpose of the work must be to generate new knowledge.

Depending on the industry, this could include:

• Developing or testing manufacturing processes or equipment where the technical outcome could not be determined in advance

• Conducting field trials or pilot testing of new materials, methods or technologies in clean technology or agriculture

• Completing eligible preclinical development, formulation testing or experimental work in pharmaceutical and biotechnology projects

• Solving genuine technical uncertainty in software, artificial intelligence or information technology where existing methods could not readily produce the required result

Supporting activities may also qualify under the current rules when they are directly related to an eligible core R&D activity. Additional requirements apply to certain supporting activities, including activities that produce goods or services or are otherwise excluded from being core activities.

The distinction matters. Commercial development, routine testing, ordinary product improvement and general business activity do not become eligible R&D just because they sit inside an innovative project.

FundFindrs’ tip: Map your core and supporting activities separately from the beginning. Do not describe the entire project as R&D. Identify the specific experimental work, the technical uncertainty being addressed and the evidence created during that work.

3. Keep records while the work is happening

Record keeping is not an administrative extra. It is part of substantiating your claim.

Your records need to show that the registered activities satisfy the eligibility requirements and that the claimed expenditure relates to those activities. The evidence must be strong enough to support the claim if AusIndustry or the Australian Taxation Office reviews it.

Useful records include:

• The technical background and research that informed the hypothesis

• A clear description of what was unknown at the start of the work

• Experimental plans showing what would be tested, measured, varied or kept constant

• Contemporaneous observations, test results, failures and design changes

• Technical reports, development logs, meeting notes and version histories

• Conclusions drawn from the experimental results

• Evidence connecting staff time, contractor work, materials and other expenditure with specific R&D activities

These records should be created as the work progresses. Trying to recreate an experiment months later usually produces vague descriptions, missing decisions and unsupported estimates.

No consultant can manufacture evidence that was never recorded. If the documentation does not show genuine experimental work, confident wording will not fix the claim.

Need help reviewing your records?

FundFindrs can assess your activities, identify documentation gaps and help organise the technical and financial information required for your R&DTI application.

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4. Separate and track eligible R&D expenditure

The R&DTI only applies to eligible expenditure connected with registered R&D activities. It does not cover every cost associated with a broader project or innovative business.

Where a cost relates to both R&D and non R&D work, you need a reasonable apportionment method based on actual use. A flat estimate with no supporting evidence is weak and may not survive review.

Costs that may need to be identified and substantiated include:

• Wages and salaries for employees working on eligible R&D activities, apportioned according to the time spent

• Contractor or consultant costs for eligible technical work

• Materials, prototypes and consumables used in experimentation

• Decline in value for assets used in eligible R&D activities, where permitted

• Eligible overheads with a clear connection to the R&D activities

Not every cost in these categories will automatically qualify. The circumstances, purpose and connection with the registered activities still matter.

FundFindrs’ tip: Track time at the individual and activity level. Reconcile timesheets, project codes and financial records regularly. A single accounting code covering an entire project is rarely enough to support an accurate R&D apportionment.

5. Understand the two parts of the claim

The R&DTI process involves two government bodies.

First, your company registers its eligible R&D activities with the Department of Industry, Science and Resources through the R&DTI customer portal.

After registration, the company claims the R&D tax offset through its company tax return with the Australian Taxation Office.

The activities, expenditure and income year reported through both stages need to align. Problems arise when the technical application describes one scope of work while the tax calculation includes costs from a broader project.

For companies with a standard 30 June income year, the registration deadline is generally ten months after the end of the income year. This means FY26 registrations are generally due by 30 April 2027.

Late preparation creates unnecessary risk. It leaves less time to resolve gaps, confirm cost allocations and collect evidence from the people who performed the work.

An experienced review can help you:

• Apply the activity criteria correctly

• Find documentation gaps before submission

• Check whether your cost apportionment is consistent and supported

• Identify eligible activities or expenditure that may have been overlooked

• Align the technical application with the company’s financial records and tax return

FundFindrs provides support across the R&DTI process, from assessing activities and preparing documentation through to calculating eligible expenditure and coordinating the claim with your accountant.

Preparing your FY26 R&DTI claim?

Our team can help you assess your activities, organise your documentation and prepare your application.

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R&DTI changes announced for 2028

The Australian Government announced significant changes to the R&DTI in the 2026 Federal Budget. These changes are intended to apply to income years beginning on or after 1 July 2028.

They do not change FY26 or FY27 claims, which continue under the current rules.

The announced changes include:

• Increasing the offset premium for eligible core R&D activities by 4.5 percentage points

• Removing eligibility for expenditure that only supports R&D

• Increasing the general minimum expenditure threshold from $20,000 to $50,000

• Reducing the higher intensity threshold from 2% to 1.5% of total expenditure

• Increasing the turnover threshold for the higher offset from $20 million to $50 million

• Limiting refundability to eligible companies operating for less than ten years, with older eligible companies receiving an equivalent non refundable offset

• Increasing the maximum expenditure threshold from $150 million to $200 million

Businesses still have time to prepare for these changes. If your current R&D program relies heavily on supporting activities, start separating core experimental work from supporting work now. Waiting until 2028 will create a documentation mess that could have been avoided.

Final thought

A strong R&DTI claim is built on four things: eligible activities, clear technical records, defensible expenditure calculations and consistency across the entire application.

Overstating a project does not make it eligible. Calling routine development “R&D” does not make it R&D. If the evidence and expenditure do not support the claim, polished language will not save it.

FundFindrs can help you assess your FY26 activities, organise the required evidence and prepare a claim that is clear, accurate and properly supported.

Book a FREE consultation