Key Highlights

  • Companies claimed $16.7 billion in R&D expenditure for 2023–24.
  • The ATO's third R&D transparency report covered 13,490 companies.
  • Small businesses accounted for 6,920 claimants, or 51%.
  • Tax Reform No. 4 would raise the refundable offset turnover threshold to $50 million.

Australian companies claimed $16.7 billion of Research and Development expenditure in the 2023–24 income year, according to the ATO's third R&D tax incentive transparency report. The data lands at a pointed moment. Parliament is considering a bill that would lift R&D offset rates by up to 50%, extend the refundable offset to larger firms and add a new $50,000 test for small claims. The numbers show who uses the incentive now, before those rules potentially change.

What the transparency report shows

The report covers R&D claims for the 2023–24 income year. In total, 13,490 companies claimed R&D expenditure of $16.7 billion.

Small businesses accounted for 6,920 of those claimants, or 51% of the total. That leaves 6,570 claimants that were not classed as small businesses.

On those figures, the average claim works out at roughly $1.24 million per company ($16.7 billion divided by 13,490). That average is likely to be heavily skewed by a relatively small number of large claimants, so the typical small Business claim is probably far lower. The report's headline figures alone do not show the median.

Why the ATO publishes this data

The R&D transparency reports are part of a broader program under which the ATO publishes tax information about companies. Under the R&D transparency rules, the ATO generally publishes the names of companies that claim the R&D tax incentive and the amount of R&D expenditure they claimed, with a delay of around two years after the income year.

The ATO also publishes an annual corporate tax transparency report on large companies' income and tax payable. The R&D report is separate, and it reaches far further into the small business sector because the incentive is widely used by smaller, research-intensive firms.

Publication is intended to give the public and policymakers more visibility over how much support the incentive provides and which sectors and firms use it.

How the refundable offset works now

Under the current law, the R&D tax incentive provides a tax offset rather than an ordinary deduction for eligible R&D expenditure. For companies with aggregated turnover under $20 million, the offset is generally refundable and is calculated at the company's tax rate plus an 18.5 percentage point premium.

For larger companies, the offset is generally non-refundable. It can only reduce tax payable, with any excess generally carried forward, and its premium depends on R&D intensity, meaning the share of a company's total expenses spent on R&D. That difference is why the proposed move of the refundable threshold to $50 million matters to growing firms.

Companies generally need to spend at least $20,000 on eligible R&D in a year to claim, unless the work is done through a registered Research Service Provider or a Cooperative Research Centre.

Hypothetical example: a small company taxed at the 25% Base Rate entity rate spends $200,000 on eligible R&D. Under the current refundable offset, its offset rate would be 43.5% (25% plus 18.5 percentage points), producing an offset of $87,000. An ordinary deduction for the same spending would be worth $50,000 in tax (25% of $200,000). The incentive therefore delivers an additional benefit of $37,000, or 18.5% of the spend. Because the offset is refundable, a loss-making start-up can receive it as cash.

What Tax Reform No. 4 would change

The Treasury Laws Amendment (Tax Reform No. 4) Bill was introduced on 27 October 2026 and passed the House of Representatives on 29 October. It is still a bill and is not yet law.

According to the second reading speech, the bill would raise core R&D offset rates by up to 50%. It would lift the turnover threshold for the refundable offset from $20 million to $50 million, bringing a larger group of mid-sized companies into the refundable regime.

Claims under $50,000 would need a Partnership with a Research Service Provider or Cooperative Research Centre, in effect raising the existing $20,000 minimum for companies conducting R&D on their own.

The government says the changes are expected to lift R&D by young firms by $400 million a year, and that they form part of $3.8 billion in business and start-up relief. Those are government projections.

The bill would also give the Treasurer power, after consulting the Industry Minister, to prescribe activities as integral to core R&D. The proposed changes would start on 1 July 2028, subject to passage and the final terms of the bill.

The debate over the $50,000 gate

The new threshold has drawn criticism. Gemma Heaney of Heaney Business Group criticised the $50,000 minimum.

The transparency data helps frame that debate. With small businesses making up about half of all claimants, any change at the lower end of the incentive could affect a large number of companies, even if their share of total dollars is modest. How many would be affected will depend on the final design, including the safe harbour arrangements still being developed. The report's headline figures do not reveal how many 2023–24 claims fell below $50,000.

The Greens have separately proposed excluding fossil fuel companies from R&D rebates, a change reported to be worth about $350 million a year. That is a proposal, not part of the bill as introduced.

What to watch

- 13 November 2026: the Senate Economics Legislation Committee is due to report on the trust and housing tax bills, as the government works through its tax legislation in the final sitting weeks of the year. - Late November 2026: the government has been reported to be targeting Senate passage of its tax reform bills in the third week of November, although the timetable is not confirmed. - December 2026: the Mid-Year Economic and Fiscal Outlook is expected to update costings for the R&D and start-up measures. - 1 July 2028: the reported start date for the R&D changes, if the bill passes in its current form.

The next transparency report, which would be expected to cover 2024–25, should provide a further baseline. If the bill passes, later reports should show whether the higher rates and the $50 million threshold change the mix of claimants.