How much of the R&D Tax Incentive goes to advisers?

The short version

The low estimate takes the cautious option at every step. Everything below explains how we got there.

Step 1: who claims, and how much

The ATO publishes the name and R&D spend of every company that claims the R&D Tax Incentive (ATO transparency reports). We merged the three reports published so far, using the ATO's amended figure wherever one exists.

• 18,731 different companies claimed at least once.
• They made 38,318 claims — about 12,773 a year.
• Together they claimed $44.7 billion of R&D spend.
• The median claim was $360,024. The average is three times higher, because a small number of very large claims pull it up — which is why we work from each company's actual figures rather than an average.

Step 2: what the incentive is actually worth

This is the step most back-of-envelope estimates get wrong.

A company with turnover under $20 million gets a 43.5% refundable tax offset on its eligible R&D spend. But claiming it means giving up the ordinary 25% tax deduction for that spend. So the real gain is the difference: 18.5% of R&D spend.

That is true whether the company is profitable (it pays less tax) or loss-making (it gets cash back). The form changes; the value does not.

Companies with turnover of $20 million or more get a non-refundable offset: their tax rate plus a premium of 8.5% (for R&D up to 2% of total expenses) or 16.5% (above that). Their real gain is the premium alone.

Source: Income Tax Assessment Act 1997, s355-100.

Step 3: how advisers are paid

The Government's 2026 review of R&D support, Ambitious Australia, found that 86% of claimants use an external adviser, and that more than 10% of claim value is paid to consultants as success fees (DISR analysis, pp. 58–59).

Success fees are usually a percentage of the benefit. The detail that matters is which number the percentage applies to:

• For a profitable company, the fee is typically charged on the net benefit — the 18.5%.
• For a loss-making company, it is often charged on the cash refund — the full 43.5%.

Step 4: the median claim, worked through

Take the median claim of $360,024 for a company under $20 million turnover.

Same spend, same statutory benefit — but the loss-making company, usually the one with the least cash, pays about 2.35 times as much.

Step 5: adding it up

We applied those rules to every company in the data:

1. Sort companies by size. The ATO data does not show turnover, so we treated a company as $20M+ if it is a public entity or averages more than $2 million a year of R&D spend. That puts 2,410 companies in the large group — they account for two-thirds of all spend.
2. Work out each company's real benefit using the rates in Step 2.
3. Apply a fee. Small companies: 10% to 15%. Large companies, who usually negotiate lower or capped fees: 5% to 8%.
4. Count only the 86% who use an adviser.

The low estimate assumes every small company is charged on its 18.5% net benefit at 10%. The high estimate assumes every small company is charged on its 43.5% refund at 15%. The truth sits somewhere between, depending on how many claimants are loss-making — a figure the ATO does not publish.

What we left out

• Adviser fees are tax-deductible, so a company's after-tax cost is lower than the fee itself.
• Minimum fees and fee caps vary by engagement and are rarely published.
• Other costs of claiming — staff time, record-keeping, accounting — are not included. This is only what is paid to R&D advisers.

Sources

• ATO — R&D tax incentive transparency reports, FY2021-22, FY2022-23, FY2023-24
• Income Tax Assessment Act 1997, s355-100 (offset rates)
• Ambitious Australia: Strategic Examination of Research and Development (March 2026), DISR analysis pp. 58–59
• Department of Industry, Science and Resources — R&D Tax Incentive