Treasury released exposure draft legislation for the next round of R&D Tax Incentive changes alongside the 2026-27 Budget, and public submissions closed on 28 September 2026. The changes are not law yet. If they pass as drafted, they apply from 1 July 2028, which means most founders have time to plan around them rather than panic about them.
The headline number moves in your favour. The refundable offset for eligible companies rises from 43.5% to 48%. The detail that actually changes behaviour is a new 10-year limit on who can get that refund as cash at all, and the clock for that limit does not start when most founders assume it does.
What is actually changing
The reform follows the “Ambitious Australia” strategic examination of R&D handed to government in March 2026. Four things move:
The refundable offset rate lifts from 18.5 percentage points above the company tax rate to 23 points above it. For a company on the 25% small business tax rate, that is the difference between 43.5% and 48% back on eligible spend.
The minimum spend to qualify rises from $20,000 to $50,000 a year.
The turnover threshold for the refundable (cash) offset rises from $20 million to $50 million, and the expenditure cap for the premium non-refundable rate rises from $150 million to $200 million.
The R&D intensity threshold that decides who gets the higher non-refundable rate drops from 2% to 1.5% of total company expenses, so more companies clear it.
None of that is controversial. The part worth your attention is what happens to refundability once your company has been trading for a while.
Why the government is doing this
Commentary on the reform points to a simple rationale: focus support on growth-oriented companies rather than businesses that claim the offset year after year without scaling. The 10-year window is the mechanism for that. A company that is still claiming the refundable offset after a decade of trading, on that reasoning, has had long enough to either commercialise and grow past the turnover threshold, or is not the kind of R&D investment the refundable cash component was designed to subsidise.
Whether that logic holds for every founder is a separate argument. What matters practically is that the 10-year window is the lever the draft actually pulls, so it is the one worth understanding in detail.
Supporting activities lose their protection
Right now, an activity can qualify as R&D either because it is a core experimental activity or because it directly supports one. The draft removes that second path. From 1 July 2028, only activities that independently pass the core R&D test (genuine technical uncertainty, a hypothesis, and a logical experimental process to resolve it) are eligible. Testing, data collection and trial production that used to ride in under “supporting activities” will need to clear the core test on their own merits, or they are out.
The 10-year clock
Here is the change that matters most for growing companies. From 1 July 2028, a company can only access the refundable, cash-in-hand version of the offset within the first 10 years of carrying on its enterprise, or the first 10 years from when it registered for the R&D Tax Incentive, whichever start date is earlier. Once that window closes, a company under the $50 million turnover threshold still gets the offset, but as a non-refundable credit carried forward against future tax, not as a cheque.
The clock does not start on your first R&D claim. It starts on the earlier of two dates: the day your company began carrying on business (building the product, hiring, entering commercial arrangements, registering for GST) or the day it first registered for the R&D Tax Incentive. For most startups, that trading start date lands well before the first R&D claim, sometimes years before.
Say a company started trading in March 2019 but did not register for the R&D Tax Incentive until FY22, three years later. The 10-year clock still runs from March 2019, not from the FY22 registration. The tenth anniversary falls in March 2029, inside the FY29 income year, which is the first income year the new rules could apply to. That company would lose the refundable offset from FY29. Waiting to register does not buy extra years. The trading start date already started the clock regardless.
Compare that to a company that started trading in 2024 and lodged its first R&D claim this year. Its 10-year window runs to 2034, well past the 1 July 2028 start date for these rules. That company has a full decade of refundable claims ahead of it and can plan around the eventual switch to a non-refundable credit, rather than being caught by it.
What counts as your start date
“Carrying on an enterprise” is doing a lot of work in the draft, and it is not the same as your incorporation date. Signals include building or selling a product, hiring staff, entering commercial contracts, and registering for GST. A company that incorporated in 2018 but spent two years in pure planning before it did any of those things would likely have a later start date than its certificate of incorporation suggests. This is a question worth getting a definitive answer on rather than guessing, because it is the single number the whole 10-year calculation hangs off.
A quick before-and-after
Current rules, for income years starting before 1 July 2028: refundable offset for turnover under $20 million is 43.5%, minimum spend is $20,000, there is no time limit on refundability, and supporting activities are eligible alongside core activities.
Proposed rules, for income years starting on or after 1 July 2028: refundable offset for turnover under $50 million is 48%, but only within the first 10 years of trading or R&D registration (15 years for eligible therapeutic goods R&D). Minimum spend rises to $50,000. Supporting activities must independently meet the core R&D test. The intensity threshold for the higher non-refundable rate drops to 1.5%, down from 2%.
Biotech and medtech get a longer runway
Companies doing R&D for the dominant purpose of generating new knowledge about therapeutic goods get 15 years instead of 10, provided they apply to Industry Innovation and Science Australia for that extended classification within nine years of their start date. Miss that nine-year window and you are back on the standard 10-year clock.
You cannot restart the clock with a new entity
The draft applies the 10-year rule across connected entities. If a group spins up a fresh company to reset the clock, the rule looks at the earliest start date anywhere in the group and uses that instead. A holding company restructure does not buy a new decade.
What does not change before 2028
Nothing changes for the current financial year or the next. The 43.5% refundable offset, the $20,000 minimum spend, and the current $20 million turnover threshold for refundability all stay in place for income years starting before 1 July 2028. The 30 April registration deadline each year is unaffected. If your company is inside its FY26 or FY27 claim window, none of this changes what you lodge or when.
What to do now
Work out your company’s actual start date under the new test, which is when you started trading, not your incorporation date and not your first R&D claim. That date is what will decide your 10-year window once the rules land.
Keep registering every year you are eligible. The reform does not reward founders who delayed their first claim, since the clock is already running from the trading start date either way.
If you are in therapeutic goods R&D, get advice early on whether the 15-year classification applies to you and what the nine-year application deadline means for your registration timing.
Treat 1 July 2028 as a planning date, not an emergency. Companies that started trading in the last few years have a full decade of refundable claims ahead of them under the new rules. Companies approaching their tenth year of trading are the ones who need to model the cash flow difference between a refund and a carried-forward credit now, while the current rules still apply.
Common questions
Does this change my FY26 or FY27 claim?
No. The current 43.5% refundable offset and $20,000 minimum spend apply until income years starting before 1 July 2028. Your April 2027 lodgement for FY26 runs under the current rules.
My company is already past 10 years of trading. Am I locked out from 2028?
Under the draft as written, yes, for the refundable component. You would still get the non-refundable offset if your turnover is under $50 million, meaning the benefit reduces your tax bill and carries forward if you are not yet in a tax-paying position, rather than arriving as cash.
Is any of this final?
No. This is exposure draft legislation. Submissions closed on 28 September 2026 and the draft can still change before it is introduced to Parliament. Treat every figure here as the current proposal, not settled law, and expect commentary on the final version once it is tabled.
What if my company is part of a corporate group?
The 10-year rule looks at the earliest start date across connected entities, so restructuring into a new entity does not create a fresh 10-year window.
Granton runs on a success-fee model. We only take on a claim if we are confident it qualifies, and we do not get paid unless you do. If you want to know where your company sits on the 10-year clock, or whether it is worth reviewing your registration history before these changes land, book a quick call at granton.io/meet.
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