Fullstack Logo

5 Biggest Questions on Australia’s R&D Tax Incentive


Considering applying for the R&D Tax Incentive? We cover off on the 5 biggest questions founders have around the R&D Tax Incentive and the application.

Considering applying for the R&D Tax Incentive?

The Australian government’s flagship operation for funding innovative technology allocates over AUD $3 billion annually. The current R&D Tax Incentive legislation, however, provides a significantly detailed maze of criteria which founders should be aware of before approaching the grant.

We cover the main questions asked by founders below.

Is our technology innovative enough for eligibility?

What AusIndustry considers here is whether your technology is ‘state of the art’ – that is, has it ever been done by the rest of humanity before.

Many tech companies from the surface can seem like copy-cats of each other (i.e. Menulog vs Foodora). What is required is to look beyond the user interface to the back end — the algorithms — holding it all together. Are these unique and are these providing an innovative new technological feature — usually advancing different characteristics like speed, utility, security, intelligence, automation.

Other criteria to look out for is whether the technology being developed had unknown outcomes. That is, could a professional have known what steps are involved to come to the same conclusion or was experimentation required. Always recommend running your eligibility by an seasoned R&D grants expert for additional confidence in your claim.

We pay an Australian based development agency to develop our product, but whilst the product management team are based in Australia, the actual development team are based overseas…

For software development, its location for R&D purposes usually means where the software developer is placed in the world when developing the code. This means that even if an Australian company hires the developer and they are an AUS resident for tax purposes, it would still be considered overseas R&D if they happened to be overseas at the time that they created it.

This is an area that you need to be extra careful of when employing agencies who may employ overseas developers or outsource development overseas since overseas R&D is generally not claimable for software development.

My tech co-founders & I spent a lot of time on developing the project, what can we claim as R&D in respect of this?

As founders holding equity in the company, you would be classed as ‘associates’ under the current legislation. This means that to claim anything, you should be paying wages from the company to yourself with actual cash payments.

Furthermore these wages should all be paid before 30 June if you are to make the claim for that financial year.

This is an important matter which is often overlooked by founders in their first year of operation – don’t fall for the same mistake.

Some of our expenses were paid personally, what can we claim here?

Again, perhaps the second biggest pitfall for new entrepreneurs is to spend thousands on R&D without a corporate structure in place. Whilst it may be super easy to begin testing the waters for your potential business success without a company, you’ll also have next to no platform to make an R&D claim. R&D expenditures in partnerships also don’t count. Expenses could potentially be claimed under a trust structure in very limited circumstances.

What the difference between a project, a core R&D activity and a supporting activity?

    Perhaps a simple example to illustrate the differences:

  • Project: The overall product being developed or improved upon – i.e. creating the Tesla Model X.
  • Core R&D Activity: Within a project, there are a plenty of different activities taking place – admin, marketing, etc. What we are interested in are the research & development activities leading to innovative new features, i.e. developing the geo-sensitive auto-lock system.
  • Supporting Activity: Basically most activities in support of the above core R&D activity, i.e. testing the geo-sensitive auto-lock system.

If you have any questions or want to kick off the grant process properly, book a time with one of our seasoned R&D Tax Incentive team today.

Was this article helpful?


Stuart Reynolds
is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, crypto and entrepreneurs.

Share this Article

Find out more.

Need accounting

Request a consultation and speak to one of our business accountants & advisors. Get clear next steps for your project.

Connect with us

Ask Us a Question?

Reach out to us about any of the topics in this article.

error: Content is protected !!

Via online meetings, email or phone, we are keen to help you get to the next level.

When it suits, just pop a time on the calendar.


Speak to our experts

Other ways to get in touch with us.

Your Privacy


We will never share your details with any third-party.

This form collects your name contact number and email address so that we can contact with you and provide a quote for our services. Please check our Privacy policy to see how we protect and manage your submitted data.



Suite 63, 388 George St, Sydney NSW 2000



120 Spencer St Melbourne VIC 3000



310 Edward St Brisbane QLD 4000

structures set Restructures

Structures - Setup & Restructures

  • Company Setups
  • Trust Setups
  • Flip Ups
  • Australian Subsidiary Setups
  • Detailed Tax Advice
  • Cap Tables
  • Equity Consulting
Get a quote Tax Advisory Icon
govt grants Incentives

Government Grants & Incentives

  • R&D Tax Incentive
  • R&D Finance consulting
  • Forward Financing consulting
  • ESIC
  • Export Market Develop. Grant (EMDG)
  • State Grant Editorial Reviews
Chat with an Advisor> Tax Advisory Icon
finance Forecasting

Financial Forecasting, Xero & Fintech Support

  • Dashboards
  • VCFO Reporting
  • Management Reports
  • Advisory Board Meetings
  • Bookkeeping & System Reviews
  • App Implementations
  • Cashflow Forecast Workshops
Get a quote structure and setup
complex tax questions

Complex Tax Questions

a) Book a consultation with a Tax Advisor
b) If more detail > Written Tax Advice

We regularly cover:
  • Corporate Structuring
  • International Tax
  • Restructures
  • Business Sales
  • Tax Consolidation
  • ESOPs
  • GST & Duties
  • FBT
  • ESIC
  • Tax Residency
Chat with an Advisor > Tax Advisory Icon
capital raising support

Capital Raising Support

  • Financial Modelling
  • Cap Table Modelling
  • Share Issues
  • Share Splits
  • Share Buy Backs Pre Diligence
  • Startup Valuations
  • ESIC / ESVCLP advice
Chat with an Advisor > Tax Advisory Icon
Tax Advisory Icon

Corporate Secretarial & Advisory Board

  • Share Issues
  • Share Transfers
  • Director Updates
  • Nominee Directors
  • Registered ASIC Agent
  • Monthly or Quarterly Advisory Board
  • AGMs
Get a Quote Corporate Secretarial