R&D Tax Incentive · Eligibility
What Does NOT Qualify for the R&D Tax Incentive?
The R&D Tax Incentive does not cover routine work, activities with no genuine technical uncertainty, or specifically excluded activities and expenditure. If a competent professional could have known the outcome in advance, or you are simply applying existing knowledge, it is not eligible R&D — no matter how new it is to your business or how much it cost. Eligibility is self-assessed, so knowing what is out is as important as knowing what is in.
What is excluded
| No technical uncertainty | Work whose outcome a competent professional could determine in advance from existing knowledge. |
|---|---|
| Routine activity | Routine development, configuration, debugging, standard testing and ordinary production. |
| Commercial-only uncertainty | Not knowing whether something will sell is not technical uncertainty. |
| Excluded core activities | The law lists activities that cannot be core R&D — e.g. market research/testing, management studies, and reproducing an existing product/process from public information. |
| Internal-administration software | Software developed for the dominant purpose of your own internal administration is excluded. |
| Building costs | Expenditure to acquire or construct a building (or part/extension/alteration) is excluded. |
Note: Some activities excluded as core R&D can still be supporting activities. This is general information — confirm your position with a registered tax agent.
In practice
A software business builds a standard customer dashboard and a quoting tool using well-known frameworks. There is no technical uncertainty — the result was knowable in advance — so this is normal development, not eligible R&D, even though it is new product for the company.
The same business later develops a novel algorithm whose performance genuinely could not be predicted and resolves it through systematic experiments. That activity may be eligible — the difference is the presence of real technical uncertainty, not the newness of the feature.
Frequently asked questions
What does not qualify for the R&D Tax Incentive?
Routine work, activities with no genuine technical uncertainty, specific excluded core activities (such as market research and reproducing existing products), software for internal administration, and excluded expenditure such as building costs.
Does routine software development qualify?
No. Routine coding, configuration, standard features and using tools as intended are normal development, not R&D. Only work resolving genuine technical uncertainty through systematic experimentation may qualify.
Is something R&D just because it is new to my business?
No. Newness to your business is not the test. The outcome must have been genuinely uncertain to a competent professional and resolved through systematic experimentation.
Can an excluded activity still be claimed?
An activity that cannot be a core R&D activity can sometimes still qualify as a supporting R&D activity if it is directly related to (and, for some, undertaken for the dominant purpose of supporting) eligible core activities.
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.