What's changing

Under the current rules, the R&D Tax Incentive recognises two kinds of activity: core R&D activities (systematic, experimental work to resolve an outcome that can't be known in advance) and supporting R&D activities (work undertaken to enable the core activities).

The 2026–27 Budget proposes to increase the offset for core experimental R&D by around 25 to 50 per cent and remove eligibility for expenditure that only supports R&D, from 1 July 2028. (Budget — Backing small business factsheet, p. 4; Budget 2026–27 — Tax reform)

In other words: the incentive concentrates on core activity, and "supporting-only" expenditure stops being claimable. The measure is unlegislated and detail can change before it starts.

Why this is a documentation question

The line between core and supporting has always been a characterisation question — and characterisation is settled by evidence. Once supporting-only expenditure is no longer eligible, the stakes on that line rise: whether an activity is a genuine core experimental activity determines whether its expenditure is in or out.

A higher offset for core R&D also tends to attract closer scrutiny of what is claimed as core. The evidence that an activity was genuine experimental R&D — the hypothesis, the experiments, the results, dated as they happened — is what holds up under examination.

The ATO has consistently treated records made at the time the work is conducted as the strongest evidence under review. (ATO — Helping you get R&D claims right)

What a defensible core-activity record looks like

For each activity you intend to treat as core, contemporaneous records typically show:

  1. The unknown — the technical hypothesis or outcome that could not be determined in advance using existing knowledge.
  2. The experiments — the systematic, iterative work actually undertaken, dated as it happened.
  3. The results — what each experiment showed and how it informed the next step.
  4. The link to expenditure — the costs tied to that specific activity.

This is the same evidence that distinguishes core from supporting today. The reform doesn't introduce a new test so much as raise the cost of getting the characterisation wrong.

What to do before 2028

The change is years away and unlegislated — but the response isn't something to start in 2028. Activities being run now will, in many cases, still be on foot when the new rules begin. Capturing the core-vs-supporting characterisation as the work happens means the record is defensible whichever way the final rules settle, and avoids reconstructing it retrospectively under time pressure later.

Dossio builds the core-vs-supporting characterisation into the capture workflow, so each activity is evidenced — and dated — as the work happens, with R&D tax experts providing oversight and governance. See how →

Sources