The 2026 R&D Tax Incentive Changes Every Australian Startup Founder Needs to Understand
If you run a startup in Australia and you spend money building something genuinely new, the R&D Tax Incentive has probably been the single most valuable government program available to you. The 2026 Federal Budget just announced the biggest shake-up to that program since 2020, and the changes land in 2028. That sounds far away. It isn’t, not when you’re planning a product roadmap and a runway.
Here is the plain-English version of what is changing, what stays the same, and what you should actually do about it now.
A Quick Refresher: What the R&D Tax Incentive Does Today
The R&D Tax Incentive (RDTI) is a federal program run jointly by AusIndustry, which decides whether your work qualifies as R&D, and the ATO, which administers the offset and pays it out. It refunds Australian companies a percentage of what they spend on eligible research and development.
For companies turning over under $20 million, the offset is currently up to 43.5%, and it is refundable. That word matters. Refundable means you get cash back even if your company is making a loss, which most early-stage startups are. A pre-revenue founder spending on development can get a real cash refund, not just a reduction in a tax bill they don’t yet have.
Right now the minimum eligible spend is $20,000, the financial year runs July to June, and the lodgement deadline is 30 April, ten months after year end. That deadline is absolute. There are no extensions.
What the 2026 Budget Actually Changed
The reforms were announced in the 2026 Federal Budget and are set to take effect from 1 July 2028. Every measure below is currently unlegislated, which means the detail can still shift as it moves through Parliament. Treat this as the direction of travel, not the final word.
Here is what was announced.
A higher offset rate for core R&D
The core offset rate is set to rise from 43.5% to roughly 48% for eligible companies. That is a meaningful bump of about 4.5 percentage points on the work that matters most, your actual experimental development.
The refundable threshold lifts to $50 million
The turnover threshold for accessing the refundable offset is being raised from $20 million to $50 million. The idea is to let growing firms keep the cash-back version of the offset for longer as they scale, rather than losing it the moment they cross the old line.
Refundability restricted to companies under 10 years old
There is a catch attached to that higher threshold. Refundability will be limited to companies less than 10 years old. The reform is clearly aimed at younger, growing innovators. If your company is older, this is the change to watch most closely.
The minimum spend rises to $50,000
The minimum eligible R&D spend is going up from $20,000 to $50,000. Smaller claims that work under today’s rules may not clear the new floor in 2028, so very early or very lean R&D programs need to plan around it.
Supporting activities lose eligibility
This is the big one, and it is the change most likely to affect your claim size. From 1 July 2028, supporting R&D activities will no longer be eligible.
To understand why that matters, you need to know how claims are built. R&D claims have two parts. Core activities are the actual experimental work, the parts where the outcome genuinely could not be known in advance. Supporting activities are the work directly related to that core experimentation, undertaken for the dominant purpose of supporting it. For a lot of software, hardware, biotech, medtech and advanced manufacturing companies, supporting activities make up a real chunk of the total claim. Removing them narrows what you can claim, even with a higher headline rate on the core.
The expenditure cap rises to $200 million
For larger claimants, the cap on eligible expenditure is increasing from $150 million to $200 million. Most startups are nowhere near this, but it is part of the same package.
So Is This Good News or Bad News for Startups?
Honestly, it is both, and it depends on your company.
The good news: if you are a young company doing genuine experimental work, a higher core rate plus a higher refundable threshold is a win. You keep cash-back access for longer and you get a bigger percentage on your core R&D.
The trade-off: the loss of supporting activities and the higher minimum spend pull in the other direction. A claim that leaned heavily on supporting work will look different in 2028. The companies that come out ahead are the ones doing real, well-documented core experimentation, and the ones that understand exactly where the line between core and supporting sits.
That line is where most of the value, and most of the risk, lives.
What You Should Do Now
2028 feels distant, but a few things are worth acting on today.
First, don’t miss what is in front of you. The changes are still years away. The current rules, including the 43.5% offset and the eligibility of supporting activities, apply right now. If your 2025 financial year ended on 30 June, your deadline to register your R&D activities is 30 April 2026. Every year you don’t claim is a year you can’t go back for. The window does not reopen.
Second, get your documentation habits right early. The single most common worry founders have is that their work isn’t innovative enough, or that they don’t have proper records. The test was never how impressive your work sounds. It is whether there was genuine technical uncertainty, a point where you didn’t know if something would work and had to try things that failed. GitHub commits, design docs, meeting notes, emails and Notion entries all count as evidence. Building that habit now makes every future claim stronger, under any set of rules.
Third, understand your core versus supporting split. With supporting activities on the way out, knowing which of your activities are genuinely core experimental work, and being able to evidence them, becomes the whole game. If most of your claim has been riding on supporting activities, it’s worth understanding that now rather than in 2028.
The Bottom Line
The 2026 Budget reforms reward young companies doing real experimental R&D with a higher rate and longer access to cash refunds. They also tighten the program by removing supporting activities and lifting the minimum spend, with all of it landing from 1 July 2028 and still subject to legislation.
None of it changes what you should be doing this year. Claim what you are entitled to under the current rules, document your work properly, and get clear on where your real R&D sits. Founders who do that will be in the strongest position whichever way the final legislation lands.
If you are not sure whether your work qualifies, or how the changes affect your specific situation, that is exactly the kind of thing worth a quick conversation. The cost of asking is nothing. The cost of missing a deadline is a full year of refund you can never get back.
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