If you’ve been claiming the R&D Tax Incentive for a few years, the change worth planning for isn’t the higher offset rate. It’s the year the refund stops arriving as cash.
Treasury released the exposure draft on 11 September 2026, and it settles the question founders have been asking since the Budget: exactly when does a company become too old for the refundable offset? The answer starts the clock earlier than most people assumed, because it doesn’t run from your first claim.
Below we set out what the draft confirms, how the 10-year clock is measured, how to work out your own cutoff year, why a new company won’t reset it, the longer runway for biotech and medtech, and what’s still genuinely open while consultation runs.
What the draft confirms
Everything we set out in Budget 2026: R&D Tax Is Being Rebuilt is in the exposure draft, and the shape hasn’t shifted. From 1 July 2028:
- The core offset rate rises. It becomes 23 percentage points above your corporate tax rate, which is roughly 48% for most eligible startups, up from 43.5%.
- The minimum claim threshold lifts from $20,000 to $50,000, unless the work is done through a registered Research Service Provider or Cooperative Research Centre.
- The refundable turnover threshold lifts from $20 million to $50 million, so successful companies stay on the refundable side for longer as they scale.
- The intensity threshold drops from 2% to 1.5% on the non-refundable offset.
- The maximum expenditure threshold lifts from $150 million to $200 million.
- Supporting R&D activities lose eligibility, leaving core experimental work as the claimable base.
That’s six of the seven changes we covered. The seventh, the 10-year limit on refundability, is where the draft adds real detail, and it’s the rest of this article.
One useful piece of timing. Supporting activities conducted in FY27 and FY28 stay eligible under the existing rules, so there’s a real window to capture and document that spend while it still counts. Existing findings that treated activities as core R&D carry across automatically under the new definition.
When the 10-year clock actually starts
Your start day is the earlier of two dates:
- the day your company first started carrying on an enterprise; or
- the day your company was first registered for R&D activities.
Carrying on an enterprise means the point you began business-like activity: building product, hiring, entering commercial arrangements, registering for GST. For most companies that lands days or weeks after incorporation, not years.
R&D registration comes later by definition, because you register after the income year in which the work was done. So the earlier of the two dates is almost always the day you started operating.
The consequence is the bit to take away: if your company traded for a few years before it started claiming R&D, the clock has been running that whole time.
Working out your own cutoff year
Company X. Incorporated 15 January 2019. Started building product and trading on 1 March 2019. First registered R&D activities for FY22, lodged 15 August 2022.
Applying the earlier-of test, the start day is 1 March 2019. The 10-year anniversary falls on 1 March 2029, which sits inside FY29 (1 July 2028 to 30 June 2029). FY29 is therefore the first year Company X can’t take the offset as cash.
Had the clock run from the registration date instead, Company X would have kept refundability until FY33. The earlier-of test costs four years.
The same logic gives you a simple lookup:
| Your start day | First income year without refundability |
|---|---|
| On or before 30 June 2019 | FY29 |
| 1 July 2019 to 30 June 2020 | FY30 |
| 1 July 2020 to 30 June 2021 | FY31 |
The pattern continues a year at a time from there. The earliest start day that keeps refundability in FY29 is 1 July 2019.
Worth being clear about what’s lost. You keep the higher offset rate; it becomes a non-refundable credit carried forward against future tax. What changes is the cash timing, which for a loss-making company is the part that matters. If that’s the gap you’re planning around, Budget 2026: Two New Ways to Turn Your Tax Losses Into Cash covers the other two levers for turning losses into cash.
Why a new company won’t reset the clock
The draft applies the start day test across your group. It also picks up the earliest day on which any entity connected with your company, any affiliate, or any entity your company is an affiliate of, started carrying on an enterprise or registered for R&D.
So a fresh entity set up to restart the 10 years doesn’t do it. The clock runs from the earliest start day anywhere in the group.
If you’re restructuring for genuine commercial reasons, it’s still worth knowing which entity holds the earliest date, because that one sets the deadline for everybody else in the group.
The longer runway for biotech and medtech
Companies whose R&D is conducted for the dominant purpose of generating new knowledge about therapeutic goods, or their therapeutic use, get 15 years rather than 10. That recognises how much longer development and regulatory approval take in those sectors.
It isn’t automatic. You apply for a formal finding from Industry Innovation and Science Australia, the board that oversees R&D registrations, within 10 months of the end of the relevant income year. If you’re in biotech, medtech or pharma, that’s an application to build into your R&D calendar now rather than discover in FY29.
What’s still open
This is an exposure draft, not law. Consultation closes on 28 September 2026, and the loss of supporting R&D activities is the measure the sector is pushing back on hardest, because for a lot of software, hardware and biotech claims supporting work is a material share of the total. Treasury has also said it will take feedback on how clinical manufacturing R&D expenditure should be treated.
Our read is that the headline architecture survives and the detail around supporting activities is where movement is still possible. If you have a view on that, the submission window is the moment to use it.
The takeaway
Work out your start day from when the company actually began trading rather than when you first claimed, and you’ll know which income year your R&D refund turns into a carried-forward credit. That date belongs in the cash flow forecast now, because for a loss-making company the refund is often the largest single receipt of the year.
There’s also a window worth using between now and FY29. Supporting activity spend still counts in FY27 and FY28, and work that’s been loosely documented as supporting is frequently core experimental activity described badly. Tightening how it’s scoped and evidenced is the most valuable thing you can do with the time, and it’s a large part of what we do on R&D Tax Incentive claims.
Find out which year your R&D refund stops
Pinning down your start day means looking at when the company genuinely began trading and at every connected entity in your group, and the answer changes how you forecast cash from FY29 onwards. If you’d like us to work out your date and model what it does to your runway, the team at Standard Ledger can help. Book a free call with the team.
Disclaimer: This article is for general informational purposes only and does not constitute financial, legal or tax advice. The legislation is still in exposure draft and the detail may change. Please speak with a qualified adviser (hey, that’s us!) before making decisions based on your specific circumstances.
