The Australian Government is considering its most significant overhaul of the Research and Development Tax Incentive (RDTI) program in over a decade. Following the release of the Ambitious Australia review — a comprehensive examination of Australia's R&D policy landscape — major changes to the program are now firmly on the agenda.
Here's what we know, what's still uncertain, and what businesses should be doing right now.
Background: Why is the RDTI changing?
Australia's investment in R&D as a proportion of GDP has been declining for years. The Ambitious Australia review found that the current RDTI framework, while valuable, is not delivering the level of innovation investment the economy needs. The review made a series of recommendations designed to increase the generosity and accessibility of the program.
The Government has indicated it broadly supports the direction of these recommendations, with formal legislative changes expected to follow the 2026–27 Budget process.
What changes are on the table
- Higher offset rates — an increase in the tax offset for core R&D activities, potentially by 25–50%
- Raised turnover threshold — more companies qualifying for the refundable offset
- Reduced intensity hurdle — making the premium rate more accessible to businesses where R&D is not the primary activity
- Higher expenditure cap — allowing more of a company's R&D spend to attract the offset
- Simplified registration — potential streamlining of the AusIndustry registration process
What's not changing
The fundamental eligibility criteria — the experimental activities test, the requirement for genuine technical uncertainty, and the core/supporting activity distinction — are expected to remain in place. Record-keeping requirements are unlikely to be relaxed.
Timeline
The Government has indicated changes will take effect from 1 July 2028, subject to legislation passing Parliament. This gives businesses approximately two years to prepare — but that time should be used actively, not passively.
What you should do now
- Continue lodging R&D claims under the current rules — the existing program remains in full effect until 2028
- Ensure your documentation and governance frameworks are current and audit-ready
- If you've been on the fence about claiming, the improving outlook makes it worth a closer look now
- Talk to an adviser about how the proposed changes affect your specific situation and future claim strategy
"Want to understand how the proposed RDTI changes affect your business? AHL Advisory is monitoring developments closely."
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