The May 2026 Federal Budget delivered the biggest R&D Tax Incentive reform since 2021, confirmed on the ATO site (published 12 May 2026). From 1 July 2028 the refundable-offset turnover threshold rises from $20M to $50M (refundable access capped to a company's first 10 years), the premium intensity threshold drops from 2% to 1.5%, the minimum annual spend rises from $20,000 to $50,000, and 'supporting' R&D activities lose eligibility entirely. Current rules (43.5% refundable offset under $20M turnover) still apply for FY2025-26 and FY2026-27.
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ATO R&D Tax Incentive overhaul: $50M threshold, no 'supporting' activities from 2028
Why this matters for founders
Founders claiming R&D now should tighten documentation immediately (ATO and AusIndustry have flagged heightened scrutiny) and start splitting 'core' vs 'supporting' activities, since integration, trials and process work will stop being claimable from FY2028-29. Startups under 10 years with $20M-$50M turnover should model the shift to refundable (cash) offsets when planning burn.
Source: Australian Taxation Office
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