Daily Australia Tax Update: 16 September 2026 : R&D Tax Incentive Draft Laws Released, Startup CGT Concession Details Confirmed & Tax Loss Carry-Back Passed

Sep 16, 2026 | Australia Updates

TITLE: R&D Tax Incentive, CGT Concession and Loss Carry-Back Changes: What Australian Companies Should Review Now

Track the R&D draft changes before you plan future claims

Treasury’s exposure draft legislation proposes significant changes to the R&D Tax Incentive from 1 July 2028. The consultation closes on 28 September 2026.

The proposed reforms are designed to direct more support towards additional business R&D, particularly for growing and innovative Australian companies. However, they will also change how you track expenditure and assess eligibility.

Key proposed changes

The minimum R&D expenditure threshold would increase from $20,000 to $50,000.
The maximum expenditure eligible for the premium offset rate would increase from $150 million to $200 million.
The refundable offset would generally be limited to entities within their first 10 years of carrying on an enterprise or their first 10 years of R&D registration.
Biotech and medtech entities conducting R&D for therapeutic goods could access the refundable offset for up to 15 years.
The refundable offset turnover threshold would increase to $50 million.
Core R&D offset rates would increase by up to approximately 50%.
The intensity premium threshold for the non-refundable offset would fall to 1.5%.
Eligible entities beyond the 10-year period with aggregated turnover below $50 million could receive the highest available rate as a non-refundable offset.
Supporting R&D activities would be removed from the incentive.
Treasury is seeking feedback on whether clinical manufacturing R&D expenditure should remain eligible.

These proposals are not yet final law. Do not change your 2026–27 tax position solely on the basis of the exposure draft. Instead, create a clear comparison between your current R&D records and the proposed rules.

Start your R&D compliance review

Separate core and supporting activities. This will help you identify expenditure that may no longer qualify.
Calculate your annual R&D spend. Test whether your activity is likely to meet the proposed $50,000 minimum.
Review your company age and R&D registration history. This may affect whether a future offset is refundable or non-refundable.
Confirm aggregated turnover. The proposed $50 million threshold will be important for growing businesses.
Retain project evidence. Keep technical records, testing results, payroll data, invoices and time records to support the claim.
Monitor Treasury’s final legislation. The final rules may change after consultation closes.

This preparation will reduce the risk of rebuilding your R&D calculation process at short notice.

Prepare now for the Innovative Business CGT Concession

Treasury has also released exposure draft legislation for the Innovative Business CGT Concession (IBCC). The proposed concession would apply to relevant CGT events occurring on or after 1 July 2027.

The IBCC would provide a 50% CGT discount on gains from eligible early-stage investments in innovative Australian startups. It is intended to support investment in businesses with growth potential, commercial innovation and the ability to scale.

Proposed eligibility requirements

An eligible IBCC company would generally need to:

Be incorporated for less than 15 years.
Be based in Australia.
Not be controlled by a company incorporated 15 or more years ago.
Not be listed.
Have aggregated turnover below $50 million.
Satisfy the innovative company test.
Satisfy the predominant activity test.

The draft rules would provide a 15-year eligibility window across all qualifying firms. The minimum holding period would fall from five years to three years. The proposed lifetime cap of $10 million would also be removed.

The concession would not apply automatically. An eligible taxpayer would need to choose the IBCC discount instead of cost-base indexation. It would also be unavailable to companies, complying superannuation entities and foreign residents.

Treasury has proposed a draft legislative instrument allowing existing companies to self-assess their innovation status. A separate instrument is planned for companies incorporated on or after 1 July 2027.

Build an investment evidence file

If your company is developing SaaS, digital products, medical technology, biotechnology or another innovative commercial product, start organising:

Incorporation and ownership records.
Aggregated turnover calculations.
Product development and commercialisation documents.
R&D expenditure records.
Intellectual property ownership evidence.
Growth and scaling plans.
Annual reporting information.
Details of direct equity investments and acquisition dates.

This evidence will help you test whether the company and investment meet the proposed conditions. It will also make future CGT calculations more reliable.

Do not treat the exposure draft as enacted law. The consultation remains open until 28 September 2026, and the final legislation may contain changes.

Use the new tax loss carry-back rules to review cash flow

Tax loss carry-back has now passed into law as a permanent measure. It applies to income years starting on or after 1 July 2026.

Eligible corporate entities with turnover of up to $1 billion may carry back current-year losses to offset tax paid in the previous two income years. This may create a tax refund for companies that were profitable before experiencing a loss.

For a growing ecommerce brand, software company, agency or other Australian business, the measure could improve cash flow during a period of investment, slower sales or increased operating costs.

Review your loss position

Compare your projected 2026–27 taxable income with previous years.
Identify tax paid in the prior two income years.
Reconcile accounting losses with tax losses.
Check that your company remains eligible under the detailed rules.
Maintain evidence for revenue, expenses, asset transactions and group structures.
Monitor ATO guidance and updated company tax return instructions.

A loss shown in your accounts is not automatically the same as a tax loss. Accurate bookkeeping and a complete tax calculation are essential before you assess a potential carry-back claim.

You should also avoid making a cash-flow decision before confirming the available amount. The benefit depends on the company’s prior tax payments, current tax position and compliance with the legislative conditions.