R&D Tax Incentive Changes: Opportunities for Growing Businesses

Australia’s Research and Development Tax Incentive has long been one of the most powerful tools available for innovative businesses.

The 2026 Federal Budget proposes strengthening it further — and broadening access to more businesses.

What’s changing from 2028

The proposed reforms focus on directing support toward genuine core R&D activities while removing some categories of supporting activities.

Key changes include:

• Increased support for genuine core R&D activities
• Refundable turnover threshold increasing from $20 million to $50 million
• Maximum eligible expenditure increasing from $150 million to $200 million
• Removal of certain supporting activities from eligibility

The most significant change for many businesses is the increased turnover threshold for the refundable component.

Previously, companies with turnover above $20 million couldn’t access a cash refund — only a non-refundable tax offset. Lifting that threshold to $50 million opens the refundable regime to a meaningful cohort of mid-sized businesses.

What this means in practice

If your business is investing in genuine technological development — software, medical technologies, advanced manufacturing, new products or processes — the R&D incentive may be more accessible than you think.

And from 2028, potentially more generous than it has been.

The removal of certain supporting activities from eligibility is a trade-off.

Businesses whose R&D claims have historically included broader supporting work should review their eligibility picture as detailed legislation emerges.

The detail is still to come

The reforms don’t take effect until 2028, and full legislative detail hasn’t been released yet.

But the direction is clear: the Government wants to reward genuine innovation.

If R&D is part of your business strategy — or you’ve wondered whether it should be — now is a good time to explore what’s possible.

Want to talk through what this means for your situation? We’re always only one call away.

Book a conversation with the Lighthouse team → hello@lha.au · 02 9055 1330