R&D Tax Incentive 2025: Key Insights Before the 30 April Deadline

The annual countdown is on…

If you’re planning to claim the Research & Development Tax Incentive (R&DTI), the 30 April 2025 deadline is fast approaching.

With the administration of the program evolving in recent years through increased compliance checks, new transparency rules, and a shift in the industries benefiting from the incentive, it is important you are preparing early and are across the program requirements.

This article provides an overview of the key elements you must understand, from important dates to application processes and regulatory reviews to ensure you know who qualifies, how to claim, and how to stay compliant.

Key Dates

For Australian companies operating on a 30 June 2024 financial year-end, the final date to lodge your FY24 R&D claim with the Department of Industry Science and Resources (DISR) is 30 April 2025. Miss this deadline and you miss out, in most circumstances late applications are not accepted.

Next Steps

1. Check Your Eligibility: Make sure your R&D activities and expenditure meet the eligibility requirements. If you’re not sure, now’s a great time to reach out to our team to discuss.
2. Organise your Records & Documentation: With the regulators reinforcing compliance measures, maintaining detailed and accurate records to substantiate your activities and expenditure is more important than ever.
3. Talk to an Expert: Expert advice can make all the difference. A well-prepared claim supported with contemporaneous evidence minimises the risk of regulator reviews, and will keep you informed of all the necessary legislative requirements.

Gild’s R&DTI Application Process

At Gild, we streamline the annual R&DTI application process by working closely with you, your project team, and your accountant. Here’s how we do it:

1. Identify eligible projects and expenditure: We meet and collaborate with your team to pinpoint all qualifying R&D activities and costs, both at the start of the year and as projects progress.
2. Gather and organise supporting documentation: We assist you in collecting all essential documentation that track and record your R&D activities and associated expenditure.
3. Prepare your R&DTI application: Working with your team and supporting documentation, we assist in the drafting of your application to clearly describe the technical objectives, the experimental process, the new knowledge being generated, and any technical challenges identified along the way.
4. Registration and eligible R&D expenditure: We assist in lodging your registration with DISR that outlines your R&D activities and associated costs. Once your application is complete, we submit it on your behalf through the registration portal. Upon registration, we will provide the necessary expenditure disclosures for inclusion in your income tax return.
5. Focus on what really matters: With us managing every step, from initial identification to final submission, you can focus on running your business while we take care of the R&D application process.

R&DTI Compliance & Strategic Review

As the R&DTI program evolves, the regulators are ramping up enforcement efforts, with a strong focus on audit readiness. Concurrently, the Strategic Review of Research and Development sparked by the discussion paper released on 12 February 2025 as part of the Federal Budget 2024-25 is launching a year-long initiative aimed at:

• Maximising the value of current R&D investments to continue driving meaningful innovation.
• Strengthen industry collaboration between research institutions and industry sectors.
• Enhance national priority funding and promote the broader adoption of innovative solutions.

In light of these strategic objectives, experts are carefully examining several potential amendments to the current R&DTI program including:

• R&D expenditure cap – the current $150 million cap, which few claimants have exceeded, may inhibit global attractiveness.
• Proposals suggest raising the $20 million threshold for the refundable R&D tax offset to better reflect inflationary pressures and be more aligned with Base Rate Entity (BRE) thresholds.
• The complexities surrounding intensity threshold calculations, including inter-year adjustments, clawbacks, and lease adjustments are under review to determine whether simplification or a single-tier rate might be more effective.
• Revisiting recommendations from previous reports, such as the introduction of a non-refundable collaboration premium for R&D undertaken with publicly funded research organisations, may further incentivise and foster important partnerships.
• Introducing quarterly refunds could provide much-needed early financing assistance, especially for start-ups navigating R&D financing.

First Annual R&DTI Transparency Report

In October 2024, the ATO published its first R&DTI Transparency Report for the 2021–22 income year, marking a significant step towards greater clarity and accountability in the program. Under new legislation introduced in July 2021, this measure is designed to promote compliance by disclosing the benefits received by R&D entities, boosting public awareness, and ensuring companies meet program requirements.

Key Insights from the Report:

• 11,545 companies claimed R&D expenditure, totalling $11.2 billion in claims.
• Small businesses made up a significant share, representing 48% of all claimants.
• The professional, scientific, and technical services industry led the way with 43% of claimants.
• Public and multinational businesses contributed the highest expenditure, with $4.9 billion in total claims.
• The report disclosed roughly $3 billion in benefits, marking a ~$322 million (or 12%) increase compared to the previous year.

Why this matters?

• The report provides clear visibility into which companies are utilising the R&DTI and the scale of their R&D investments which will help shape a more transparent and accountable environment for the program.
• As the R&DTI program is forecast to expand even further into 2025 and beyond, both DISR and the ATO are intensifying their efforts to ensure that the program remains compliant, impactful, and fit for purpose. This means it’s more important than ever to keep contemporaneous and accurate records and be informed of the key integrity provisions, including Payments to Associates and Expenditure at Risk considerations.

We’re here to help

Our dedicated team of R&DTI and Grants specialists are committed to achieving the best possible outcomes for your business. We support you at every stage, simplifying the process of reporting and claiming the R&DTI.

Our experienced team has a proven track record in assisting companies with R&DTI claims and successfully submitting applications for a wide range of Government Grants, thereby unlocking valuable funding opportunities.

As the 30 April 2025 deadline approaches, now is the time to review your eligibility and prepare your FY24 R&DTI claim.

Get in touch with our R&D Advisors today.