R&D Tax Facts – 2025 Issue #2
Our R&D Tax Facts is a summary of important developments in the world of the R&D Tax Incentive (R&DTI) over the last 3 months. More detailed articles on government funding programs and strategies can also be found on the Insights section of our website.
Important R&D Tax Incentive deadline reminder
The deadline for registering R&D activities for the YE 30 June 2024 is now less than 1 month away!
Eligible R&D activities between 1 July 2023 and 30 June 2024 need to be registered with the Department of Industry, Science & Resources by no later than Wednesday, 30 April 2025. See more details in our FY2024 R&D deadline reminder.
A 14-day extension is available if required, however companies must request this prior by 30 April. In applying for an extension of time, companies need to explain (1) why extra time is needed to complete registration, and (2) why 14 days will be enough to complete and submit the application. For more details on the process of extending or varying your R&D Tax Incentive registration, see here.
Advance and Overseas Finding application planning
Any companies considering whether to obtain an Advance Finding for their current Australian or Overseas R&D activities should be planning this as soon as possible given applications for FY2025 need to be submitted by Monday, 30 June 2025.
Advance Findings are a helpful way to gain certainty of the eligibility of your Australian R&D activities. Furthermore, overseas R&D activities can only be claimed via the Advance Finding application process. Whilst your Australian R&D activities do not require an Advance Finding, there are benefits of obtaining assurance as to whether your activities are eligible, particularly for high-value or complex projects.
Refer to our recent article which summarises the pros and cons of Advance Findings as part of your R&D Tax Incentive strategic planning.
ART Decision – Body by Michael vs IISA
On 24 January 2025, the Administrative Review Tribunal (ART) issued an R&D Tax Incentive related ruling in the case of Body by Michael Pty Ltd v Industry Innovation and Science Australia (IISA).
The ART determined that the activities claimed by Body by Michael (BBM) were not eligible for the R&D Tax Incentive, affirming the decision of IISA. The project in question was entitled “BBM stress release system (new innovated services)” and involved software development activities. The case provides an interesting consideration of the definition of core R&D activities, as well as analysis of ‘excluded core R&D activities’ related to social sciences.
The complete decision is available here.
Strategic Examination of Australia’s R&D System
In February 2025, the Federal Government opened the consultation phase of its Strategic Examination of Australian R&D. As a reminder, this examination was announced late last year in an effort to address Australia’s diminishing R&D investment and poor comparative performance across various R&D and innovation metrics.
Stakeholders and anyone connected to Australia’s R&D system are encouraged to review the discussion paper and submit their feedback. Follow this link for further information and note that the consultation process will close on Friday, 11 April 2025.
2025-26 Federal Budget
The 2025-26 Federal Budget announcement was delivered by Treasurer Jim Chalmers on 29 March 2025. Unfortunately, in our view it represented a missed opportunity to lay out a compelling plan for addressing immediate concerns for Australia’s R&D and innovation system.
In terms of the potential impacts for the R&D Tax Incentive, the budget papers included downward revisions in the projected program payments identifying an estimated decrease of $640.6mill in over the next five years to 2028-29.
See our article for further details on how the Budget stacked up in terms of supporting R&D, innovation, and technology investment.
R&D Tax Incentive Transparency Report – 2022-23
The second annual R&D Tax Incentive Transparency Report will be published in September 2025. This will include data regarding R&D claims made in the 2022-23 income year.
In late February, the ATO wrote to all registered tax agents (and directly to entities not represented by an agent) of R&D entities that will have data included in the 2022–23 report. Please ensure you have received this communication from the ATO and contact your registered tax agent if you have any questions regarding the data that will be included in the 2022–23 report.