Businesses that overlook R&D tax incentives miss out on their benefits: RSM
Businesses often underestimate their eligibility for R&D tax incentives and miss out on the benefits, according to RSM.
Research and development tax incentives have broader eligibility requirements than many businesses think, Dr Rita Choueiri, partner and national leader of R&D tax at RSM, has said.
“The definition of R&D under the incentive is much broader than most assume. It includes software development, engineering, and even food technology. If a company is solving a technical problem and there’s a level of experimentation involved, they should explore whether they qualify,” Choueiri said.
“I often see businesses underclaiming or missing out because they assume their work doesn’t qualify.”
The Australian government has offered R&D tax incentives to boost innovation and research in the private sector, which the ATO said played a pivotal role in Australia’s global competitiveness and economic future.
The R&D program provided a refundable tax offset rate of 18.5 per cent above the company’s tax rate for eligible entities with annual turnover below $20 million.
Non-refundable offsets were available for other eligible entities, at 8.5 per cent for R&D expenditure below 2 per cent of total expenditure, and 16.5 per cent for R&D expenditure above 2 per cent.
According to Choueiri, chief executives could maximise the benefits of R&D tax incentives by engaging early and strategically with eligibility criteria, maintaining strong documentation and collaborating with experts.
“It’s a complex space, and the regulations evolve. Having an experienced advisor can make the difference between a successful claim and a missed opportunity.”
Businesses should maintain clear records of experiments, iterations and technical challenges in order to maximise their chances of a successful claim, she added.
Choueiri said businesses should think beyond compliance and use R&D incentives as a strategic tool.
Those that are developing or improving a product, process or service through experimentation may be eligible for the R&D tax incentives, Choueiri said, as long as they document the process transparently.
She added that businesses should explore other forms of support for their particular industry, and the government also offers commercialisation grants and industry-specific funding.
“The businesses that thrive are the ones that integrate R&D tax planning into their broader financial and innovation strategies.”
“Many businesses don’t realise just how much support is available to them. The R&D Tax Incentive isn’t just a refund or a cost-saving measure – it’s a strategic tool that can drive innovation, attract investors, and improve cash flow.”
