Two documents, one direction — different dials
The Ambitious Australia review (released March 2026) recommended redesigning the R&D Tax Incentive. The 2026–27 Federal Budget (announced 12 May 2026) adopted a version of that redesign, proposed to apply to income years starting 1 July 2028. The direction is the same — reward genuine core, experimental R&D and better target young, fast-growing firms — but several settings were changed along the way.
Side-by-side
| Lever | Review recommended | 2026–27 Budget adopted |
|---|---|---|
| Refundable-offset turnover threshold | $20M → **$50M** | $20M → **$50M** |
| Refundability time limit | Young firms (report: first **3 years**) | Firms operating **under 10 years** |
| Minimum project / spend | $20,000 → **$150,000** | $20,000 → **$50,000** |
| R&D intensity measure | **Remove** (for large firms) | **Keep**, lower 2% → **1.5%** |
| Annual expenditure cap | **Remove** (no ceiling) | **Keep**, raise $150M → **$200M** |
| Supporting (non-core) activities | **Deemed rate** | **Remove eligibility** |
| Core/experimental offset | Company rate **+ 23.5%** premium | Increase **~25–50%** (EY: ≈ +4.5pp) |
| Advance payments | **Quarterly advance payments** | Not adopted |
Sources: Ambitious Australia, pp. 59–63; Budget 2026–27 — Tax reform; EY analysis. The "25–50%" and "+23.5% premium" are different framings, not directly comparable.
Where the Budget went further — and where it pulled back
- More inclusive of small projects. The review proposed lifting the project floor to $150,000; the Budget set it at $50,000 (and requires sub-$50,000 R&D to be done with a recognised research organisation).
- A longer refundability runway. The review limited refundability to a firm's early years; the Budget extended eligibility to firms operating under ten years.
- More conservative on structure. The review proposed removing the R&D intensity measure and the expenditure ceiling entirely. The Budget kept both — lowering the intensity threshold to 1.5% and lifting the cap to $200M rather than abolishing them.
- Harder on supporting activities. The review proposed a deemed rate for supporting (non-core) activities. The Budget went further and removed eligibility for expenditure that only supports R&D.
What's settled — and what isn't
The Budget figures are the announced design. They are unlegislated, and detail can change through consultation and drafting before the 1 July 2028 start. Until then, the current rules continue to apply.
For companies and advisers, the practical takeaway is the same regardless of which dials move: the reformed regime weights core experimental activity more heavily, so the ability to characterise and evidence each activity — with records made at the time — is what carries the claim.
Sources
- Ambitious Australia: Strategic Examination of R&D, Final report (R&D Tax Incentive recommendations pp. 59–63).
- Australian Government — Budget 2026–27: Tax reform
- EY — Federal Budget 2026–27: R&D Tax Incentive changes