What Does Self-Assessment Mean?
Like the rest of the tax system, the R&D Tax Incentive (R&DTI) is based on self-assessment. This means you take responsibility for confirming that both you and your R&D activities meet the program's eligibility requirements before you apply.
The complete eligibility definitions for the R&DTI are set out in section 355 of the Income Tax Assessment Act 1997 (ITAA).
Eligible Entities
Start by checking whether you qualify as an eligible R&D entity—this comes before you assess your activities.
You are an eligible R&D entity if you are a corporation that falls into one of these categories:
- Incorporated under an Australian law
- Incorporated under a foreign law but an Australian resident for income tax purposes
- Incorporated under a foreign law and you meet both conditions:
- You are a resident of a country with which Australia has a double tax agreement that includes a 'permanent establishment' definition
- You carry on business in Australia through a permanent establishment as defined in that agreement
The Australian Taxation Office (ATO) makes final decisions on entity eligibility for the R&DTI. You can find more information—including details about consolidated and multiple entry consolidated groups—on the ATO's Eligibility for R&D tax offsets page.
Eligible Activities
Your R&D activities qualify if they are core R&D activities or directly support core R&D activities (known as supporting R&D activities).
Not all R&D activities are eligible under the R&DTI program. From 1 July 2025 onwards, R&D relating to tobacco and gambling is excluded, unless the sole purpose is harm minimisation.
You may claim the R&D tax offset for overseas activities, provided you have obtained a positive overseas finding beforehand.
The Department of Industry, Science and Resources makes determinations about activity eligibility for the R&DTI.
Core R&D Activities
Core R&D activities are experimental activities designed to create new knowledge—such as new or improved materials, products, processes, or services. For an activity to qualify, the outcome must:
- Not be capable of being known or determined in advance, and
- Only be determinable through systematic work (hypothesis, experiment, observation, evaluation, and logical conclusions)
Tobacco and gambling-related activities can only qualify as core R&D if conducted solely for harm minimisation purposes.
Supporting R&D Activities
Supporting R&D activities are those that directly support a core R&D activity.
Some activities must meet an extra condition before they count as supporting activities. If your activity (except those related to gambling or tobacco):
- Cannot be classified as a core R&D activity, or
- Produces or directly relates to producing goods or services
Then it must be conducted primarily for the purpose of supporting a core R&D activity.
Tobacco and gambling activities can only qualify as supporting R&D if conducted solely for harm minimisation.
Excluded R&D Activities
The R&DTI program excludes certain activities from registration.
However, some excluded core R&D activities may still qualify as supporting activities if they:
- Directly support an eligible core R&D activity, and
- Are conducted primarily to support that core R&D activity
Gambling and tobacco activities only qualify if conducted solely for harm minimisation.
Eligible Entities – Quick Reference
Use this table to check whether your entity qualifies for the R&D Tax Incentive:
| Entity Type | Eligibility Criteria | Eligible? |
|---|---|---|
| Australian incorporated corporation | Incorporated under Australian law | ✓ Yes |
| Foreign incorporated corporation | Australian resident for income tax purposes | ✓ Yes |
| Foreign incorporated corporation with permanent establishment | Resident of country with double tax agreement and operates through Australian permanent establishment | ✓ Yes |
| Partnership, sole trader, or trust | Not a corporation | ✗ No |
Note: The Australian Taxation Office (ATO) makes final decisions on entity eligibility. For consolidated groups or other complex structures, refer to the ATO's Eligibility for R&D tax offsets page.
R&D Activity Types – Quick Reference
Use this table to determine whether your activities qualify under the R&D Tax Incentive:
| Activity Type | Description | Eligible? |
|---|---|---|
| Core R&D Activity | Experimental work to create new knowledge (materials, products, processes, or services). Outcome not known in advance and determined through systematic work. | ✓ Yes |
| Supporting R&D Activity | Directly supports a core R&D activity. Some activities must be conducted primarily for this purpose. | ✓ Yes |
| Tobacco-related activity | Only eligible if sole purpose is harm minimisation | ✓ Conditional |
| Gambling-related activity | Only eligible if sole purpose is harm minimisation | ✓ Conditional |
| Overseas activity | Eligible if you have obtained a positive overseas finding beforehand | ✓ Conditional |
Note: From 1 July 2025 onwards, tobacco and gambling activities are excluded unless conducted solely for harm minimisation. The Department of Industry, Science and Resources makes determinations about activity eligibility.
