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An R&D tax incentive example may involve developing a new product, improving a process, or testing a solution where the outcome is uncertain and requires systematic experimentation.
If your Australian company invests in developing new products, solving technical challenges, or improving existing processes, you may be eligible for the R&D Tax Incentive — a government program offering significant tax offsets or cash refunds from the Australian Taxation Office (ATO). Below are practical R&D tax incentive example to help you understand what kinds of activities could be eligible.
Many companies miss out on this benefit simply because they don’t realise their work qualifies as R&D. These examples show how eligible innovation projects often look in the real world — whether you’re in software, engineering, product design, or renewable tech.
Refers to business activities that:
These examples help you identify whether your project fits the Australian R&D Tax Incentive program, which rewards eligible R&D with a refundable tax offset or cash refund from the ATO.
Design, Developing and Testing New Concept Software or Hardware.
One of the most common types of R&D activities example is in software and tech development. If your team is designing and testing new software features, new game engines, or innovative tools that solve technical problems not readily solvable with current technology, this can qualify for the incentive.
Example:
A gaming software company creates a new graphics engine to deliver high performance across devices. The work involves experimentation to solve performance issues and testing iterations before deployment.
Why this qualifies: You’re addressing an unknown outcome with a systematic development process — core criteria for R&D eligibility.
Another strong R&D activities example is developing new physical products or improving existing ones in ways that require scientific or technical innovation.
Example:
A manufacturing business develops biodegradable plastic bags that maintain strength but break down faster than traditional plastics, requiring repeated testing and material reformulations.
Why this qualifies: Activities that involve testing new materials and processes to solve technical challenges are classic R&D.
Why this qualifies: The project includes hypothesis formulation, experiments, and analysis — key parts of R&D.
Core R&D activities are the main experimental activities that directly address a technical uncertainty, such as creating, testing, or improving a product, material, or process.
Supporting R&D activities are tasks that directly assist the core work, such as building prototypes, analysing data, preparing samples, or conducting laboratory testing.
A common example is a company that runs controlled trials to improve a manufacturing process, documents the results, and uses the findings to develop a better commercial solution.
Some R&D activities example in different industries include:
Developing a drought-resistant crop variety through field trials, soil testing, and analysis of plant performance.
Testing a new fermentation method to improve the efficiency or stability of a biological product through laboratory experimentation.
Creating a lower-sugar beverage formulation by testing ingredient combinations, shelf life, and consumer-safe processing methods.
Developing a stronger concrete mixture by experimenting with recycled materials and assessing durability under different conditions.
Testing new extraction techniques to improve mineral recovery while reducing energy use or environmental impact.
The following activities generally do not qualify as R&D tax incentive example:
Maintain clear records of experiments, costs, results, and decision-making to support eligibility.
Using clear R&D eligible activities helps you:
The Australian Government expects R&D activities to show:
At R&D Assist we specialise in helping businesses identify and document eligible R&D projects. Whether you want more tailored R&D tax incentive or support for your claim, we’re here to guide you step by step.
Contact us for a free consultation — we’ll help you determine if your R&D activities qualify under the Australian R&D Tax Incentive program and maximise your refund.
Understanding the Australian R&D Tax Incentive can help businesses determine whether their innovative projects and development activities may qualify for valuable tax benefits. Below, we answer some of the most common questions about eligible R&D activities, supporting activities, software development, and how much a business may be able to claim under the incentive.
An R&D activity can include developing a new product, service, technology or IT system where the outcome cannot be known or determined in advance by a competent professional based on existing knowledge and experience. R&D Assist explains that eligible core activities generally involve a systematic experimental process that starts with a hypothesis and aims to generate new knowledge.
A supporting R&D activity is an activity that directly relates to a core R&D activity and helps enable or support the experimental work being undertaken.
Yes, software development can potentially qualify when the development involves eligible experimental R&D and meets the relevant requirements; however, ordinary software development or modification by itself does not automatically qualify, and R&D Assist specifically lists general modifying or developing computer software among activities that are not included.
According to R&D Assist, businesses with annual turnover below $20 million may be eligible for a 43.5% refundable tax offset on eligible R&D expenditure, while businesses with aggregate turnover above $20 million may be eligible for a 38.5% non-refundable offset; for example, $800,000 of eligible expenditure at 43.5% would produce a $348,000 offset.
If you are unsure if your potential R&D activity qualifies, drop us a line and we’ll let you know for sure!
We specialise in R&D claims and assisting clients with an annual turnover below $20 million every step of the way to optimise their R&D process from:
R&D claim preparation, compliance and lodgement; and /or
Tax Return preparation, compliance and lodgement
We charge on a no win no fee basis.