At a time when every penny counts, it is worth knowing about the programs in place designed to help support startups and small companies pushing the boundaries of innovation. Startup founders often get so caught up in the long list of things that need to get done that they forget to take advantage of some of these programs and miss out on some of the ways they can extend their limited cash resources.

One such program is the Australian Government’s Research & Development (R&D) Tax Incentive Program which offers a refund of up to 45c in every dollar spent on core R&D activities – that’s 45c for every dollar you spent (on eligible R&D activities) – back in your pocket!!

The R&D tax incentive is designed to offset the cost to companies that are performing research and development around how to do something new, and performing experiments to test if the new ideas will work. It turns out that this kind of activity is actually something most startups are already doing as part of their early core activities – especially ones that follow the lean startup methodologies and focus on build, test, learn cycles to develop new ways of doing things. You do need to be scientific about those tests from forming a Hypothesis through to measuring the results – but this should be key to the way startups are working through their discovery process already.

Figure 1: Core R&D Activities – Key Requirements of the Overall Test



There are a few criteria that need to be met to apply:

  1. You have to conduct eligible R&D activities
  2. Your turnover needs to be less than $20 million to qualify for the 45% refund. If your turnover is greater than $20 million the refund percentage drops to 40%.
  3. You need to spend more than $20,000 on eligible activities to actually make a submission.
  4. You need to have kept records of your experiments, expenditure and related eligible activities.

You can self assess whether your company qualifies using the R&D Tax Incentive snapshot tool.

If your company qualifies you can also look at the activities you are completing to see if they meet the criteria. The AusIndustry site has a great Online eligibility Tool online that you can work through to see if your startup activities would qualify. It covers the following questions:

  • Did your company carry out an experiment (or set of related experiments) or do you know the details of an experiment it will carry out?
  • Could the outcome of the experiment not have been known or determined in advance?
  • Was the scientific method utilised and required in order to determine the outcome of the experimental activities?
  • Was the purpose of the experiment to generate new knowledge?
  • Was the activity conducted wholly within Australia?

If you answered yes to the above questions you could potentially apply for the grant.

If you want to apply for the grant, keep in mind you need to register your activities with AusIndustry 10 Months after the end of the companies income year.

Want the full picture? You can download the complete R&D Tax Incentive guide here.