The Government is reforming the R&D tax incentive to simplify and better target Government support for business R&D. From 1 July 2028, the Government will:

• increase the offset for core R&D expenditure by around 25% to 50%, through a 4.5 percentage point increase in core R&D offset rates;
• reduce the intensity threshold from 2% to 1.5%;
• remove eligibility of supporting R&D expenditure for the R&D tax incentive;
• enable growing firms to retain access to the refundable tax offset for longer by increasing the turnover threshold for the highest offset rate from $20 million to $50 million;
• for firms below the $50 million turnover threshold, maintain older firms’ eligibility for the higher offset rate while limiting refundability to firms under 10 years of age;
• lift the maximum R&D tax incentive expenditure threshold from $150 million to $200 million; and
• improve assurance on smaller claims by lifting the minimum expenditure threshold from $20,000 to $50,000, with research activities valued below this amount required to be undertaken with a registered Research Service Provider or Cooperative Research Centre.