Highlights

  • The Greens want oil and gas excluded from roughly $350 million a year in R&D credits before backing the changes.
  • Independents Monique Ryan and Kate Chaney warn the overhaul would restrict refundable offsets for biotechnology firms under 15 years old.
  • The government says the overhaul will lift young firms' R&D investment by $400 million a year from 1 July 2028.
  • Labor controls the House but needs the Greens or enough of the crossbench to pass the bill in the Senate.

Picture the Senate corridor on a sitting day: on one side a demand to strip oil and gas companies out of R&D tax credits, on the other a warning that young medical researchers could lose out. In the middle sits Labor, with a bill that needs votes from both camps. The R&D Tax Incentive rewrite reached Parliament on 27 October facing opposition on two fronts.

What the overhaul would do

The R&D changes sit in Schedule 2 of the Treasury Laws Amendment (Tax Reform No. 4) Bill 2026, introduced by Treasurer Jim Chalmers on 27 October. It is a bill, not law, and the changes would apply from 1 July 2028.

According to the second reading speech, core R&D offset rates would rise by "up to 50%", and the turnover threshold for the refundable offset would climb from $20 million to $50 million. The refundable offset would be limited to firms up to 10 years old, with eligible biotech, medtech and therapeutic-goods research getting up to 15 years.

Smaller claims, under $50,000, would require a partnership with a Research Service Provider or Cooperative Research Centre. The Treasury Minister could designate activities as "integral to" core R&D by legislative instrument. Consultation on the R&D definition is planned for early 2027.

The Greens' price: oil and gas out

The Greens want oil and gas companies excluded from roughly $350 million a year in R&D tax credits, and have threatened to withhold support for the R&D changes until that happens. The government has not publicly agreed, and it is unclear how an exclusion would be defined, whether covering all activities of an oil and gas company or only fossil fuel projects.

The demand fits a wider Greens campaign on gas. On the same day, new Greens leader David Shoebridge proposed a 25% gas export tax, which he says would raise $17 billion a year to fund a tax cut. That is a party proposal, not government policy.

If the $350 million held steady, it would total about $1.4 billion over four years. That is simple arithmetic, not an official costing.

The teals' worry: biotech and medical research

Ryan and Chaney said the changes would "restrict access to refundable tax offsets for medical research and biotechnology companies less than 15 years old".

The government points out that biotech and medtech get 15 years rather than 10. The teals' quote suggests they see the age limit itself as a restriction on firms that previously faced no such cut-off. A non-refundable offset only reduces tax payable, so loss-making companies gain little immediate benefit.

Hypothetical example: how the age limits play out

Three companies each have $30 million turnover and eligible core R&D after 1 July 2028. Company A, an eight-year-old software firm, sits inside the 10-year limit and below the new $50 million threshold, so it could access the refundable offset. Company B, a 12-year-old medtech firm, still qualifies under the 15-year allowance. Company C, a 12-year-old engineering firm, is past 10 years and gets the higher rate only as a non-refundable offset.

A 16-year-old biotech would fall outside even the extended window, the kind of firm the teals appear to have in mind. That case is for illustration only.

The Senate arithmetic

Labor is expected to pass the bill in the House, but in the Senate it needs the Greens or enough of the crossbench. Meeting the Greens could help secure passage, while accommodating the teals could mean changed age limits. The R&D changes share a bill with four other schedules, so a deadlock could hold up the package unless it is amended or split.

What to watch

Neither a committee referral nor a reporting date has been confirmed. Any deal on oil and gas or biotech age limits would likely appear as Senate amendments.