Can You Claim the R&D Tax Incentive Under $20,000?

The $20,000 minimum R&D expenditure rule

To be entitled to an R&D tax offset for an income year, your total notional R&D deductions normally must be at least $20,000. If your eligible R&D expenditure for the year is below that, you generally cannot claim the offset for that year — unless an exception applies.

For start-ups and SMEs running lean, this threshold is often the barrier: the research is real and may be eligible, but the spend is simply too small to clear $20,000.

The exception: expenditure to a registered RSP

business.gov.au is explicit: the $20,000 threshold does not apply to expenditure you incur to a research service provider to conduct your R&D. In other words, when an RSP does the work, that expenditure can be claimed from the first dollar — which removes the minimum-spend barrier for small claimants.

The same exception applies to certain monetary contributions to a Cooperative Research Centre (CRC). Both routes exist precisely so that smaller R&D projects, run through recognised research bodies, can still access the incentive.

Important: removing the threshold does not remove the eligibility test. The R&DTI is self-assessed — you must still self-assess that your activities are eligible R&D, and your tax position should be confirmed with a registered tax agent.

A worked example (illustrative only)

Suppose a small company spends $12,000 having a registered RSP carry out eligible experimental development in a field the RSP is registered for. On its own, $12,000 is below the $20,000 threshold, so without the RSP route the company could not claim the offset that year. Because the spend is with a registered, non-associate RSP, the threshold does not apply, so the $12,000 may be claimable — subject to the company self-assessing that the activities are eligible R&D.

This is a simplified illustration, not a calculation of your benefit. Actual offset rates, eligibility and amounts depend on your circumstances and should be confirmed with a registered tax agent.

The conditions you have to meet

• The RSP is registered for the relevant research field. The work must fall within a field for which the provider is on the public RSP register.
• The RSP is not your associate. The exemption does not apply to spend with an associated entity.
• The activities are eligible R&D. You self-assess your activities against the R&DTI definition of core and supporting R&D activities.

The proposed 2028 change ($20,000 → $50,000)

The Government has announced (in the 2026-27 Budget) a proposal to raise the minimum R&D expenditure threshold from $20,000 to $50,000, intended to apply to income years starting on or after 1 July 2028. Under the proposal, R&D below the threshold would need to be conducted through an RSP or CRC to qualify.

This is announced, not yet law — the current $20,000 rule applies until then. If it proceeds, it makes the RSP route even more important for smaller R&D budgets. Read our explainer on the proposed $50,000 threshold reform.

How to claim R&D under $20,000 — step by step

1. Self-assess your activities. Confirm your activities meet the R&DTI definition of eligible R&D.
2. Engage a registered RSP in the right field. Have the RSP conduct the R&D so the expenditure qualifies for the threshold exemption — see our R&D services.
3. Register and claim. Register your R&D activities with AusIndustry within 10 months of your income year end, then claim the offset in your company tax return (RSP expenditure is reported at its own dedicated label). A registered tax agent prepares and lodges the claim.

Frequently asked questions