R&D Tax Incentive · The offset
Refundable vs Non-Refundable R&D Tax Offset
Under current law, your R&D tax offset is either refundable or non-refundable depending on your size. Companies with aggregated turnover under $20 million get a refundable offset — broadly the company tax rate plus an 18.5% premium (around 43.5%) — which can be paid as a cash refund if it exceeds the tax you owe. Companies with turnover of $20 million or more get a non-refundable offset at an intensity-based premium above the company tax rate. Rates and rules can change, so confirm your position with a registered tax agent.
The numbers (current law)
| Under $20m turnover | Refundable offset — broadly company tax rate + 18.5% (around 43.5%); the excess can be a cash refund. |
|---|---|
| $20m or more turnover | Non-refundable offset at an intensity-based premium above the company tax rate. |
| Why it matters for startups | A loss-making startup with no tax to pay can still receive a refundable offset as cash. |
| Minimum spend | Generally $20,000 of eligible R&D expenditure — waived for spend with a registered RSP. |
Note: Rates, thresholds and the rules can change (including proposed reforms from 2028). These figures are current-law general information — confirm with a registered tax agent.
In practice
A pre-revenue startup with aggregated turnover well under $20 million spends on eligible R&D but pays no income tax because it is making a loss. Under the refundable offset, it can receive the offset as a cash refund — real cash flow at exactly the stage it needs it most.
A larger, profitable company over $20 million turnover instead receives a non-refundable offset that reduces its tax payable, at a premium that scales with how R&D-intensive its spending is.
Frequently asked questions
What is the difference between the refundable and non-refundable R&D tax offset?
The refundable offset (for companies under $20m aggregated turnover) can be paid as a cash refund if it exceeds tax payable. The non-refundable offset (for companies $20m and over) reduces tax payable but is not refunded as cash; unused amounts can generally be carried forward.
How much is the refundable R&D tax offset?
Under current law it is broadly the company tax rate plus an 18.5% premium — around 43.5% — for companies with aggregated turnover under $20 million. Rates can change.
Can a loss-making startup get a cash refund?
Yes — that is the point of the refundable offset. A company under $20m turnover with no tax payable can receive the offset as a cash refund, subject to eligibility.
Does the $20,000 minimum spend still apply?
Generally yes — you usually need at least $20,000 of eligible R&D expenditure, but spend with a registered Research Service Provider (RSP) is exempt from that threshold.
Sources
General information only — not tax, financial or legal advice. R&D Tax Incentive eligibility, thresholds, rates and deadlines depend on your specific activities and circumstances and can change; eligibility is self-assessed. Always confirm current rules with the Australian Government (business.gov.au and ato.gov.au) or a registered tax agent. Last reviewed: June 2026.