R&D Tax Incentive: What Founders Should Know
For many growing businesses, innovation happens long before it's labelled as research and development or "R&D"
Teams are testing new ideas, refining products, solving technical problems, and investing in outcomes that aren’t guaranteed. Often, this work is resource-intensive and sits alongside the pressure to move quickly and show traction.
The R&D Tax Incentive (R&DTI) is designed to support businesses conducting structured experimentation to generate new knowledge, yet it’s often misunderstood or explored too late. Learn more here →
This article outlines how the program works at a high level, when it becomes relevant, and how businesses typically approach it in practice. FundFindrs specialises in supporting Australian businesses through the R&D Tax Incentive, providing clear guidance on eligibility, requirements, and approach.
When the R&D Tax Incentive comes into play
In practice, the R&D Tax Incentive becomes relevant when development work moves beyond routine execution and into areas where outcomes can’t be known in advance.
This often includes situations where a business is:
investing meaningfully in product or technology development
working through technical challenges without a clear or established solution
testing, refining, or iterating beyond standard or off-the-shelf approaches
Importantly, this isn’t limited to groundbreaking inventions. Many eligible activities involve improving existing products, services, platforms, or processes where achieving the desired outcome requires experimentation and evaluation, rather than straightforward implementation. Learn more about eligible activities here →
Understanding where this line sits is often one of the first hurdles businesses face when considering the program.
An overview of how the R&DTI Program works
At a high level, the R&D Tax Incentive allows eligible Australian companies to claim a tax offset of up to 43.5% on qualifying R&D expenditure. Learn how much you can claim here →
Key points:
the program is available to Australian-incorporated companies
activities must involve technical uncertainty and experimentation
a minimum R&D spend of $20,000 generally applies
claims are prepared annually for eligible activities undertaken in a given financial year and must be registered by 30 April of the following year
the program is jointly administered by the ATO and the Department of Industry, Science and Resources
Rather than providing upfront funding, R&DTI works retrospectively recognising eligible R&D activity once it has been undertaken.
For members of The Founders Union looking to go deeper, FundFindrs provides clear, practical guidance on eligibility and how assessments are applied.
Why R&DTI is often underutilised
In practice, many eligible businesses delay engaging with the R&D Tax Incentive, despite it being widely used across innovation-led sectors.
Common reasons include:
uncertainty around what qualifies as R&D
concern about the level of documentation required
lack of clarity around timing and expectations
competing priorities during growth phases
As a result, some businesses only explore the program once development costs have already been absorbed - rather than planning for it alongside innovation efforts.
This is where early awareness tends to make a difference, even if a claim isn’t immediate. Why lodge your claim now? Find out more →
How businesses typically approach the R&D Tax Incentive
Rather than treating R&DTI as a standalone exercise, many businesses approach it as part of their broader development planning.
This usually involves:
understanding early on whether activities are likely to qualify
capturing information as development progresses
aligning technical work with financial reporting requirements
ensuring claims are prepared accurately and defensibly
Taking this approach early can help businesses make more informed decisions about how and when to engage with the program, even if a claim isn’t immediate.
Final thought
For businesses undertaking work where outcomes aren’t known in advance, the R&D Tax Incentive is worth understanding early.
It doesn’t require changing how you build - but it does reward businesses that take a considered approach to innovation, documentation, and timing. In practice, having experienced guidance can help ensure that work is framed and assessed appropriately, reducing uncertainty and improving the chance of a successful outcome.
Founders Union members can book a complimentary consultation with the FundFindrs team to discuss how the R&D Tax Incentive can help accelerate their work.
Proudly brought to you by:
