How to Prepare for the R&D Tax Incentive (R&DTI) Claim in FY25

The Research & Development Tax Incentive (R&DTI) is a government initiative designed to support businesses investing in innovation. It helps companies claim back some of the money spent on developing new or improved products, processes, or services.

Applications for the FY25 period open on 1st July, so savvy business owners are already taking a closer look at how to prepare and claim this benefit.

At its core, the R&DTI is about turning your investment in innovation into tangible cash flow you can use for future growth. But making a claim isn’t as simple as filling out a form, proper planning and preparation are essential.

We asked our R&DTI expert partners, FundFindrs, to share their insights. They’ve put together a brilliant guide with five key steps to take before you start the process – plus a bonus tip at the end.

1. Establish If Your Business Qualifies for the R&DTI Program

You must determine whether your business meets the eligibility criteria.

To qualify, you must be an R&D entity, which includes:

• Corporations incorporated under Australian law
• Corporations incorporated under foreign law but an Australian resident for income tax purposes
• Corporations incorporated under foreign law and a resident of a country with which Australia has a double tax agreement, carrying on business in Australia through a permanent establishment

You must also:

• Be liable to pay income tax in Australia
• Be engaged in eligible R&D activities
• Have spent at least $20,000 on eligible R&D activities

You cannot claim the R&D tax offset if you are:

• An individual
• A corporate limited partnership
• An entity whose entire income is exempt from income tax
• A trust (unless it is a public trading trust with a corporate trustee)

2. Check If Your Activities Qualify as R&D

Not all innovation qualifies under the R&DTI. The program focuses on resolving technical uncertainty through systematic investigation or experimentation.

Industries that commonly claim include:

• Technology and software development
• Engineering and manufacturing
• Agriculture, mining, biotechnology, and renewables

Eligible R&D activities typically:

• Generate new knowledge or solve a technical challenge
• Follow a planned approach with testing and evaluation
• Involve uncertainty where the outcome isn’t known in advance

Ineligible activities usually include:

• Routine improvements
• Refining existing processes without technical risk or innovation

Take time to review government guidelines and consult a professional if unsure.

3. Maintain Detailed and Accurate Records

Strong record-keeping is essential to support your claim. From the beginning of your project, document what you’re doing, why, and what you’re discovering.

Recommended records include:

• Project plans outlining objectives and technical challenges
• Test results, data, or prototypes
• Notes on progress and setbacks
• Details of design or process changes and the reasons behind them
• Meeting notes or email discussions showing decision-making

Organised records build a strong narrative of your R&D work and reduce the risk if your claim is reviewed.

4. Track Your R&D Costs Separately

The R&DTI isn’t just about what you do it’s also about what you spend.

Track eligible R&D costs from the outset, such as:

• Wages and salaries of employees working on R&D
• Contractor fees for technical work
• Materials and supplies used in experiments or prototypes
• Depreciation of R&D equipment
• Overheads directly tied to R&D work

Tip: Set up project codes or a separate ledger in your accounting system to streamline the process.

5. Get Advice to Strengthen Your Claim

The R&DTI application process can be complex. Small errors or misunderstandings can reduce your claim or lead to audits.

Working with an experienced advisor helps you:

• Confirm eligibility of activities and costs
• Identify any gaps in documentation
• Understand how to present your claim effectively
• Avoid common mistakes that delay or weaken claims

For SMEs, external guidance can be the difference between a good claim and a great one.

BONUS FUNDFINDRS TIP: Use Trusted Resources and Tools

There’s a sea of R&DTI information out there but not all of it useful or practical.

To make life easier, FundFindrs recommends their FREE R&DTI Blueprint, a practical, step-by-step guide to preparing a successful claim.

It covers:

• How to identify eligible R&D activities
• Best practices for record-keeping and cost tracking
• Common mistakes and how to avoid them
• The key stages of preparing and submitting your claim

👉 Download it here

Final Thought: Why Planning Ahead Matters

The R&D Tax Incentive can provide real financial relief, money you can reinvest into future innovation and growth.

But to claim it successfully, you need to plan ahead and build the right foundation.

By following these steps, you’ll be better prepared to submit a strong, accurate claim and put your business in the best position to benefit from the R&DTI.

FundFindrs has helped businesses of all sizes access R&D funding and boost their innovation journey. Want to get started? Download their free R&DTI Blueprint and begin building your plan today.