Quick answer: Yes — you can generally claim a government grant and the R&D Tax Incentive together. But if a grant is received as a recoupment of the same R&D spend, a clawback adjustment adds an amount to your assessable income so you don't benefit twice on the same dollars. It doesn't cut your grant or reduce the offset itself.
25 June 2026 — the 2026–27 Federal Budget announced R&DTI changes scheduled to start 1 July 2028; this article describes the current rules unless stated otherwise.
It is one of the most common questions we hear from Adelaide founders: "We've already received a government grant for this project — does that rule us out of the R&D Tax Incentive?"
The short answer is reassuring. You generally can claim a government grant and the R&D Tax Incentive (R&DTI) for the same project. The longer answer is where the detail matters. When a grant helps fund the very same R&D expenditure you later claim, the tax system applies a clawback adjustment so you don't receive the full benefit of both on the same dollars. Understanding that mechanic — before you spend, not after — is what keeps a claim clean.
This is general information from a Registered Research Service Provider. The mechanics below are set out by the ATO and business.gov.au; the tax treatment of your specific grant depends on your circumstances, so you should self-assess and seek your own advice.
Can you claim a grant and the R&D Tax Incentive together?
Yes — receiving a grant does not, by itself, disqualify your R&D activities or expenditure from the R&DTI. The programs are designed to coexist. What changes is how much net benefit you ultimately keep when grant money has effectively reimbursed your R&D costs.
The key concept is recoupment. The ATO treats certain government payments — grants, rebates and reimbursements — as a "recoupment" of expenditure where the payment is received as a recoupment of, or is required to be spent on, the R&D expenditure you are claiming. When that link exists, a clawback adjustment is triggered to prevent a "double dip": the grant covering a dollar of cost and the full R&D offset applying to that same dollar.
Not every grant works this way. Treatment can differ between:
Project-specific grants tied to particular R&D expenditure (more likely to be a recoupment), and
General or untied funding not directed at the specific R&D costs you claim.
Because the wording of your grant agreement drives the outcome, it is worth reading the funding terms with the R&DTI in mind from day one.
What to check in the grant agreement
The grant agreement's wording decides the treatment — not the name of the program. Before you assume how a grant interacts with the R&DTI, read the terms and look for:
Is the funding tied to specific R&D expenditure, or is it general support for the business? Tied funding is far more likely to be a recoupment.
**Is the money received as a recoupment of, or required to be spent on, the R&D costs** you intend to claim? That phrasing is the trigger for clawback.
How are milestones and deliverables worded? Milestones that mandate spend on particular R&D activities point toward recoupment of that expenditure.
Does the agreement reimburse cost, or pay for an outcome/output? Cost reimbursement tied to your R&D spend is the classic recoupment case.
Are any conditions placed on how the funds are used? Conditions directing funds to the specific R&D you claim strengthen the recoupment link.
When the wording is ambiguous, treat it as a question for your tax agent rather than an assumption — the clawback method applies by law where recoupment exists.
How recoupment and clawback actually work
Here is the part that trips people up: a clawback does not reduce your grant, and it does not reduce your R&D offset. Instead, the ATO applies it by adding an extra amount to your assessable income in the year you claim the offset.
In many cases, the clawback is implemented through an assessable income adjustment under the R&D recoupment provisions. The exact calculation is determined under the tax law for the relevant income year and applied in practice by your tax agent. Per the ATO, the clawback does not reduce the grant or the offset; it increases your assessable income, and a cap applies so the clawback cannot exceed the grant amount (pro-rata to your total R&D expenditure). The effect is to neutralise the slice of benefit that overlaps with grant funding — so you keep the grant in full, and you keep the R&D benefit on your own spend, but you don't get a windfall on the dollars the grant already paid for.
A simplified worked example
Suppose a company spends $200,000 on eligible R&D, and a government grant reimburses $80,000 of that expenditure.
The company can still notionally claim the full $200,000 in its R&DTI calculation.
Because $80,000 was received as a recoupment, a clawback adjustment applies to that $80,000.
The adjustment adds an amount to assessable income under the R&D recoupment provisions, rather than reducing the grant or the R&D offset itself. The precise calculation is determined under the applicable tax rules for the relevant income year and applied in practice by your tax agent. A cap applies so that the adjustment cannot exceed the amount of the grant, broadly on a proportional basis relative to total R&D expenditure.
The figures above are illustrative only and rounded to show the mechanic; they are not a calculation of your benefit. The actual amounts depend on your offset rate, aggregated turnover, tax position and the specific terms of the grant. The ATO's guidance, "Clawback of R&D tax incentive offset and catch-up deductions," sets out the formal method.
The practical takeaway: a grant plus the R&DTI usually still leaves you better off than either alone — clawback simply removes the overlap, not the benefit.
How to structure your records so the claim stays clean
Most clawback headaches are really record-keeping headaches. The cleanest claims keep grant-funded spend and tax-claimed spend clearly distinguishable from the start.
Separate the funding sources in your ledger. Tag which costs were met by grant money and which came from your own funds, so the recouped portion is obvious at year end.
Keep the grant agreement on file and note whether the funding is tied to specific R&D expenditure or is general — this signals whether recoupment is in play.
Map grant milestones to R&D activities. If a grant requires spend on particular deliverables, link those deliverables to your registered R&D activities.
Document the technical work regardless of who paid. Eligibility for the R&DTI rests on the experimental nature of the activity, not the funding source — strong contemporaneous records protect the whole claim.
This is exactly where a Registered Research Service Provider adds value: not by giving tax advice, but by helping you define, structure and evidence the R&D itself so that the expenditure mapping is sound. We work alongside your tax agent — they handle the offset and clawback calculation; we make sure the underlying research is defensible.
This article covers clawback at the national level — the rules apply the same way regardless of which state you operate in. If you're a South Australian business weighing a state grant (such as Seed-Start) against an R&DTI claim, we have a companion piece on the R&D Tax Incentive in Adelaide that drills into the SA-specific grants angle.
A final note for planning: you may have seen discussion of 2028 R&DTI reforms and quarterly credits. As at the date of this article these are proposed measures, not law, and should not be relied on for current-year decisions.
Talk to Ignition Research before you rely on a grant-funded R&D budget — we help keep grant-funded and claimed costs cleanly separated, so your tax agent can apply the clawback method on a clean set of records.
Frequently asked questions
Q: Can I claim a government grant and the R&D Tax Incentive at the same time? A: Generally yes. Receiving a grant does not disqualify your R&D activities or expenditure. But if the grant is received as a recoupment of the same R&D expenditure you claim, a clawback adjustment applies so you don't benefit twice on those dollars. You should self-assess against ATO guidance and seek your own advice.
Q: What is a clawback (recoupment) adjustment? A: It's a tax adjustment that applies when government funding effectively reimburses R&D expenditure you also claim under the R&DTI. It exists to prevent "double-dipping" — claiming both the grant and the full offset on the same cost.
Q: Does clawback reduce my offset or add to my income? A: Broadly, it adds an extra amount to your assessable income. In many common cases the effect is expressed as an R&D recoupment tax amount often described as 10% of the recouped expenditure, but your tax agent calculates the actual treatment against the relevant year's rules. It does not reduce the grant, and it does not reduce the offset — and a cap applies so the clawback cannot exceed the grant amount (pro-rata to total R&D expenditure).
Q: How do I avoid double-dipping on a grant and R&D? A: You don't avoid clawback by hiding the overlap — it applies by law where recoupment exists. You keep the claim clean by separating grant-funded and self-funded expenditure in your records, retaining the grant agreement, and letting your tax agent apply the clawback method correctly.
Sources & further reading
ATO — Clawback of recoupments (government grants and reimbursements) (ato.gov.au)
ATO — How clawback adjustments work (ato.gov.au)
business.gov.au — Grants and the R&D Tax Incentive (business.gov.au)
Related: R&D Tax Incentive overview · Talk to us
This article is general information from a Registered Research Service Provider about the R&D Tax Incentive. It is not tax, legal or financial advice; eligibility and tax treatment depend on your circumstances and you should self-assess and seek your own advice.
