EOFY (End of Financial Year) is more than just a deadline for tax lodgement. For innovative Australian businesses, it’s also the last chance to capture and document eligible Research and Development (R&D) activities and costs to secure valuable government support under the R&D Tax Incentive.
Designed to encourage innovation across industries, the R&D Tax Incentive can provide up to a 43.5% refundable tax offset for eligible small to medium businesses and a non-refundable offset with an incremental premium for larger entities. But like all powerful tax concessions, it comes with tight eligibility rules, detailed substantiation requirements, and strict registration deadlines.
June 30 is your cutoff to finalise which activities and expenses belong in the 2024–25 financial year. Many businesses miss out on thousands in offsets because they delay gathering records or don’t understand what qualifies as eligible R&D. Worse, backdating or vague descriptions can trigger audit scrutiny from AusIndustry or the ATO.
At Blackwattle Tax, we specialise in R&D Tax Incentive support tailored for middle-market companies. Our team of Chartered Accountants and former Big 5 tax professionals work closely with clients to ensure R&D activities are clearly documented, costs are correctly categorised, and claims are fully compliant from technical summary to ATO lodgement.
Who Qualifies for the R&D Tax Incentive?
Before diving into documentation, it’s critical to understand whether your business and activities are eligible to claim the R&D Tax Incentive. The program, jointly administered by AusIndustry and the Australian Taxation Office (ATO), is available to companies that invest in activities aimed at generating new knowledge, whether through improving a product, process, or technology.
Entity Eligibility: Who Can Claim?
To be eligible, your business must:
- Be incorporated under Australian law (or meet conditions as a foreign-owned entity with Australian R&D activity)
- Be liable to pay income tax in Australia
- Incur at least $20,000 in eligible R&D expenditure during the income year
- Conduct at least one eligible core R&D activity in Australia
If you’re unsure whether your entity structure qualifies, our Strategic Tax Advisory team can assess your position and guide potential restructuring if needed.
We support businesses of all sizes with custom R&D Tax Advisory strategies.
Core vs Supporting R&D Activities
A successful R&D claim must centre around at least one “core activity”:
A core activity is:
- Experimental
- Based on scientific principles
- Designed to generate new knowledge
- Involves technical uncertainty that can only be resolved through a systematic process (hypothesis > test > evaluate > conclude)
Supporting activities are those that assist a core activity (e.g., software used for testing, lab preparation, prototype development) and are deductible if they meet the “dominant purpose” test.
Common examples across industries include:
- Software development for custom platforms
- Engineering design for new manufacturing processes
- Chemical testing in food and beverage innovation
- Machine learning model training in AI environments
If your activity simply applies existing knowledge (like configuring an off-the-shelf app), it’s not eligible.
We work closely with business owners, engineers, product managers, and technical teams to translate internal language into R&D-compliant technical documentation.
EOFY Documentation Checklist — What to Prepare Now
Preparing your R&D claim starts long before you submit anything to AusIndustry or the ATO. The real work, and the key to maximising your benefit, lies in how well you document your R&D activities and expenses during the financial year. And that means your EOFY preparation matters.
Here’s what every business must gather before June 30 to support an accurate, compliant R&D Tax Incentive claim:
Technical Project Summaries with Defined Hypotheses
For each R&D project, start by documenting:
- The problem you were trying to solve
- The hypothesis you tested (what you thought would work)
- The method you used to test it (experiments, trials, iterations)
- The results, and how they contributed to new knowledge
This is your core activity narrative. It must demonstrate that your outcome could not be known in advance and that the activity involved technical uncertainty, not just business risk.
We assist our clients by extracting this data from project meetings, Slack threads, internal memos, and sprint boards. Our Bookkeeping and R&D specialists then turn this into clear technical records suitable for AusIndustry review.
Time Tracking and Payroll Allocation
The largest R&D cost for most businesses is salaries and the ATO requires proof that employee time was spent on eligible tasks.
You need:
- Timesheets or time-tracking logs
- Position descriptions linked to R&D tasks
- Payroll data identifying R&D staff, contractors, and their hours
This is where many businesses get caught. Allocations must be reasonable and verifiable not just estimates. Our Bookkeeping team helps link payroll reports to R&D effort accurately.
Invoices, Receipts & Cost Categorisation
You’ll need to categorise every R&D-related expense by:
- Salaries and on-costs
- Materials and consumables
- Software or cloud infrastructure
- Contracted R&D (with written agreements)
- Prototype or test equipment
Make sure supplier invoices clearly describe the R&D component. We help clients flag costs early, and ensure the right tax codes are used to support deductibility.
EOFY is the time to reconcile what you’ve spent vs what qualifies. Our R&D Tax Incentive team reviews your ledgers and expenses to confirm what makes the cut and what doesn’t.
Calculating Your R&D Tax Offset Before June 30
Once you’ve identified eligible activities and gathered your documentation, it’s time to estimate your potential benefit. Calculating your R&D Tax Incentive offset accurately before June 30 allows you to forecast your refund or tax saving, manage your cash flow, and decide whether to accelerate or defer expenditure before the financial year closes.
Here’s how the calculation works in practice:
Refundable vs Non-Refundable Offsets
The R&D Tax Incentive offers two types of benefits:
- Refundable Offset — for companies with an aggregated turnover under $20 million
Benefit: 18.5% + your corporate tax rate (typically 25%), refunded as cash if in tax loss
Example: A $100,000 eligible R&D spend could return up to $43,500 in cash - Non-Refundable Offset — for companies with turnover over $20 million
Benefit: Your corporate tax rate + an incremental premium (based on R&D intensity)
This offset reduces your tax payable but is not refunded in cash if you’re in loss
Understanding which category your business falls into is essential. We often run forecasts for clients under our Virtual CFO Services to model cash impacts, especially if their eligibility could change based on revenue growth or structural shifts.
Learn how our Virtual CFO Services help businesses model R&D benefit scenarios before year-end.
R&D Intensity: The Premium Uplift
For larger companies, the amount of uplift you receive depends on your R&D intensity your eligible R&D expenditure as a percentage of total company expenditure:
- 0% to 2% R&D Intensity: 8.5% premium on top of corporate tax rate
- Over 2% R&D Intensity: 16.5% premium
This makes EOFY the time to lock in your final eligible spend and review overall costs. Spending $50k more in R&D could move you above the 2% threshold unlocking a higher benefit tier.
We work with management and finance teams to strategically identify final expenses, optimise timing, and project net benefit so there are no surprises post-lodgement.
Common Mistakes Businesses Make with R&D Claims
The R&D Tax Incentive is generous but heavily scrutinised. Each year, many businesses face audit reviews, claim rejections, or clawbacks because they didn’t meet eligibility requirements or failed to properly document their claims.
Here are the most common mistakes we help clients avoid, especially in the critical weeks leading up to EOFY:
Backdating or Vague Documentation
You can’t wait until July to “fill in the blanks.” The ATO and AusIndustry expect contemporaneous documentation records created during the course of the R&D work, not after the fact.
- Problem: A company writes its technical summaries in July, based on memory or retroactive notes.
- Risk: AusIndustry may reject the claim due to lack of contemporaneous evidence.
Our team works with businesses in May and June to extract live documentation from project management systems, developer logs, or lab reports so evidence is time-stamped and verifiable.
Over-Claiming Operational Expenses
Not every cost that supports a project is eligible R&D spend. Examples of common ineligible items:
- Marketing or sales activity, even if linked to an R&D project
- General business administration
- Off-the-shelf software or configuration work
- Costs outside Australia (unless supported by an Overseas Finding)
The most common issue we see? Clients trying to bundle every cost remotely connected to innovation into their R&D claim. This increases audit risk and can invalidate a whole submission.
We help businesses draw clear boundaries between eligible core/supporting R&D and general operational costs, using evidence, not assumptions.
Incomplete or Missing Contracts
If you’ve used a contractor for part of your R&D work, you must have a written agreement in place before the work is completed. Without this, the cost may be excluded.
We review supplier relationships and subcontractor agreements before EOFY to ensure every R&D dollar is supported with the right paper trail.
Lodging Your R&D Application — What Happens After EOFY
Once EOFY passes and your records are in order, the next phase is formal registration and lodgement of your R&D claim. While June 30 is the cutoff for eligible expenditure, the process of securing your benefit continues into the new financial year.
Here’s what to expect and how Blackwattle Tax supports you through every step:
Registering Your R&D Activities with AusIndustry
To make a valid claim, your R&D activities must be registered with AusIndustry, the scientific review arm of the program.
- Deadline: 10 months after the end of your company’s income year (i.e. April 30, 2026 for standard June 30 balancers)
- Submission: Completed through the R&D Tax Incentive customer portal with a detailed technical description of each project
Your technical summary must align precisely with AusIndustry’s definitions of core and supporting activities. Ambiguity or vague language is one of the top reasons registrations are rejected.
We prepare all registration documentation on behalf of our clients. This includes translating technical language into government-acceptable terms, aligning your descriptions with the legislative framework, and confirming supporting evidence exists for each claim.
Learn how our R&D Tax Incentive specialists prepare and lodge your registration with AusIndustry on time and in compliance.
Lodging Your R&D Tax Schedule with the ATO
Once your activities are registered and approved, the next step is to lodge the R&D tax schedule along with your company’s income tax return. This schedule reports:
- Total eligible expenditure
- Breakdown by category (staff, contractors, consumables, etc.)
- Expected tax offset amount
Our Chartered Accountants ensure that the R&D figures integrate smoothly with your financial statements and tax return. We also cross-check for consistency between what was claimed and what’s reported in your general ledger.
When Will You Receive the Benefit?
- Refundable offsets (for small businesses) are paid as part of your tax return refund often within 2–6 weeks post-lodgement
- Non-refundable offsets reduce your tax liability directly
Blackwattle Tax monitors progress with both the ATO and AusIndustry, and we assist with any post-lodgement queries or audit reviews that may arise.
Book Your EOFY R&D Strategy Session
The R&D Tax Incentive isn’t just a year-end checkbox, it’s a powerful tool to fuel growth, accelerate innovation, and reclaim valuable cash flow. But like all strategic tax tools, it rewards those who prepare early, document properly, and align activities with the rules.
If your business has spent time or money developing new products, improving processes, building software, or solving technical problems there’s a strong chance you’re eligible for an R&D tax offset. But the time to act is now.
Blackwattle Tax offers complimentary 30-minute EOFY R&D strategy sessions for eligible businesses. During this call, we help you:
- Determine whether your projects qualify as R&D (core or supporting)
- Identify and categorise eligible expenses before June 30
- Create a custom documentation checklist based on your industry
- Forecast your potential tax benefit or refundable offset
- Plan the next steps for registration and ATO lodgement
Our team brings global Big 5 accounting experience into a local, client-focused model designed for Australian middle-market businesses. From food & beverage startups to SaaS innovators and advanced manufacturers we’ve helped hundreds of businesses unlock the full value of their R&D.
Schedule a FREE 30-minute consultation today to discover how we can help you make strategic decisions and streamline your business operations.
Stay informed and empowered by subscribing to our monthly newsletter, where you’ll receive valuable insights on business advice, investment tips, and strategic tax planning.
Disclaimer: We endeavour to make sure the information provided in this guidance is up to date and accurate. Please note, that the information is only intended to be a guide, with a general overview of information. This guidance is not a comprehensive document and should not be interpreted as legal advice or tax advice. The information is general in nature. You should seek the assistance of a professional opinion for any legal and tax issues related to your personal circumstances.
