Emerging Trends in Australia’s R&D Tax Incentive Program for 2025

The R&D Tax Incentive (RDTI) continues to be one of Australia’s most powerful tools for encouraging business innovation. But as the economy shifts and technology evolves, so too does the way this program is managed and applied.

In 2025, several trends are shaping how businesses access and benefit from the RDTI. Here’s what you need to know if you’re planning to claim this year.

Expanding Eligibility Beyond Traditional Sectors

While the RDTI has long been associated with manufacturing, biotech, and engineering, eligibility is broadening. Service industries like fintech, digital health, and education technology are increasingly being recognised for innovative activities.

For businesses in these sectors, it means previously overlooked projects may now qualify – as long as they involve systematic experimentation and create new knowledge.

Greater Transparency from Regulators

The Australian Taxation Office (ATO) and the Department of Industry, Science and Resources (DISR) are stepping up transparency in how claims are assessed. Regular bulletins, updated guidance notes, and published case studies are giving businesses clearer insights into what counts as eligible R&D.

This is designed to build confidence in the program, but it also raises the bar for documentation. Claimants should expect to justify their activities in detail.

Tighter Scrutiny on Software Claims

Software development remains one of the most challenging areas of R&D compliance. Regulators are continuing to scrutinise whether projects involve true technical uncertainty and experimentation, or if they’re simply commercial implementation.

Startups and scale-ups building digital products should be prepared to document the experimental steps clearly – including prototypes, testing, and iterations.

Increased Oversight on Associate Payments

A recurring compliance focus is payments to associates – where related entities (like subsidiaries or directors) carry out R&D activities. In 2025, the ATO is again highlighting that these payments must be actually paid before year-end to be eligible.

This reinforces the need for careful planning around intercompany transactions and financial flows.

Analytics-Driven Compliance Reviews

Behind the scenes, both ATO and DISR are using more sophisticated data analytics to spot patterns of high-risk claims. This means reviews are now smarter and more targeted, rather than random.

For businesses, this underscores the importance of audit-ready claims with strong technical reports and well-kept records.

Final Thoughts

The R&D Tax Incentive remains an invaluable source of funding for Australian innovators in 2025. The program is evolving towards broader eligibility and greater transparency – but with that comes a sharper focus on compliance.

For businesses, the opportunity is clear: stay informed, keep records strong, and approach claims strategically. Those who do will continue to reap significant rewards from the RDTI.