Australia’s Research and Development (R&D) Tax Incentive is facing significant proposed changes that could reshape how businesses fund, manage and claim innovation expenditure.
In September 2026, the Australian Treasury released exposure draft legislation outlining reforms scheduled to commence on 1 July 2028, subject to parliamentary approval. The proposals aim to simplify the incentive, encourage genuine innovation and improve program sustainability.
For businesses working with an accountant Box Hill, understanding these proposed changes early could support better tax planning, investment decisions and cash-flow management. Businesses across Box Hill, Doncaster and Melbourne’s eastern suburbs involved in technology, manufacturing and product development should pay particular attention.
Treasury – R&D Tax Incentive Reform Consultation
What Are the Proposed R&D Tax Incentive Changes?
The proposed reforms introduce several important adjustments to the existing framework.
| Key measure | Current rules | Proposed from July 2028 |
|---|---|---|
| Refundable offset turnover threshold | $20 million | $50 million |
| Minimum R&D expenditure | $20,000 | $50,000 |
| Maximum R&D expenditure threshold | $150 million | $200 million |
| Non-refundable offset intensity threshold | 2% | 1.5% |
| Supporting R&D activities | Eligible if conditions met | Eligibility removed |
| Refundability age restriction | No equivalent general age cap | Generally 10 years, with up to 15 years for eligible therapeutic goods businesses |
The proposals would also increase incentives for qualifying core R&D activities, potentially changing how businesses prioritise and document innovation projects.
These measures remain proposals and are not yet operative legislation.
PwC Australia – October 2026 Monthly Tax Update
Who Could Benefit From the Reforms?
Growing technology businesses and innovation-focused SMEs could be among the main beneficiaries.
Increasing the refundable offset turnover threshold to $50 million may allow more expanding companies to access refundable incentives, subject to other eligibility requirements.
Businesses conducting substantial core R&D activities, including advanced manufacturing, software innovation and biotechnology research, could also benefit from stronger incentives.
However, the proposed company-age restrictions mean that higher turnover eligibility would not automatically translate into refundable benefits for every established business.
Which Businesses Could Face Challenges?
The reforms could create additional challenges for smaller start-ups and businesses relying heavily on supporting R&D activities.
Raising the minimum expenditure threshold to $50,000 may exclude some smaller innovation projects. Removing supporting R&D activities from eligibility could also reduce claimable expenditure for businesses with complex research programs.
Established companies exceeding the proposed age limits may face reduced access to refundable offsets, even where their turnover remains below $50 million.
These changes highlight the importance of assessing both potential benefits and eligibility risks.
R&D Tax Planning Opportunities Before 2028
Businesses should use the proposed transition period to review their innovation expenditure and supporting documentation.
Key planning priorities include:
- Reviewing existing R&D activities and distinguishing core research from supporting functions.
- Forecasting expenditure against the proposed thresholds.
- Assessing company age, turnover and refundability eligibility.
- Strengthening technical records and project documentation.
- Modelling potential cash-flow impacts under the proposed framework.
Working with a qualified Box Hill accountant can help businesses assess these issues alongside their broader tax and financial obligations.
How Infinity Solution Tax Plus Can Help
Infinity Solution Tax Plus supports businesses with accounting, taxation, business advisory and financial planning considerations.
As a trusted Box Hill accounting practice, the firm can assist businesses in reviewing expenditure records, assessing tax implications and preparing for potential legislative changes.
Businesses in Box Hill, Doncaster and surrounding areas can seek professional guidance to understand how the proposed reforms may affect their circumstances.
Final Thoughts: Preparing for the Future of R&D Tax Incentives
The proposed R&D Tax Incentive reforms represent a potentially important shift in Australia’s innovation support framework.
Although the consultation period closed on 28 September 2026, the final legislative outcome remains subject to further government and parliamentary processes.
Businesses should monitor developments, maintain reliable documentation and assess their future eligibility before making significant investment decisions.
Early engagement with a trusted accountant in Box Hill can support informed planning as Australia’s R&D incentive framework evolves.
Disclaimer: This article contains general information only and does not constitute financial or taxation advice. You should seek personalised advice from a registered tax or financial professional.
