What expenditure am I not able to claim for?

You can’t include any of the following expenditure in your RDTI claim:


Property-related expenditure

  • expenditure incurred in acquiring depreciable property or that would be depreciable in the absence of an election under section EE 8 of the Income Tax Act 2007
  • expenditure that contributes to the cost of depreciable tangible property (other than prototypes) or tangible property that would be depreciable in the absence of an election under section EE 8 of the Income Tax Act 2007 (limited exceptions may apply)
  • depreciation on property to the extent the cost of the property is eligible expenditure
  • depreciation on pooled property where an item in the pool is not used solely in performing R&D
  • certain amounts of depreciation when property is acquired from an associate
  • expenditure to acquire an interest in intangible property other than software


Expenditure related to associates

  • profits on R&D services and property provided by associates
  • amounts in excess of market value for leasing assets from associates


Land-related expenditure

  • expenditure to acquire land
  • expenditure on remediating land


Expenditure supported by other tax credits or grants

  • expenditure for which you have received an R&D tax credit from another country
  • expenditure that relates to a government or local authority grant (some exceptions apply in relation to Callaghan Innovation project grants)


Expenditure outside spending thresholds

  • if your eligible expenditure is less than $50,000, expenditure or loss that is not for an approved research provider (ARP)
  • amounts in excess of $120m unless you have approval for a higher amount (this includes any amounts spent by your associates on R&D)


Expenditure outside value thresholds

  • expenditure on goods or services in excess of market value
  • depreciation when an asset is written off or sold below its adjusted tax value
  • expenditure on inputs used, or subject to a process or transformation, to the extent the expenditure does not exceed the value of the output from that expenditure (feedstock rule)


Certain software-related expenditure

  • expenditure on bespoke software
  • internal software development expenditure in excess of $25m (this includes any amounts spent by your associates on R&D)


GST, interest and finance

  • the GST input portion of expenditure
  • interest and other financing costs


Expenditure on discouraged activities

  • expenditure incurred by petroleum miners, mineral miners or a person who would be a mineral miner of geothermal energy (limited exceptions may apply)


Non-eligible R&D-related activities

  • the cost of acquiring technology that is used as a basis for further R&D activities
  • expenditure to commercialise the results of R&D activity


Doubled up expenditure

  • someone else’s eligible expenditure


Other types of excluded expenditure

  • gifts
  • expenditure in determining a person’s entitlement to an R&D tax credit
  • expenditure on corporate governance activities
  • expenditure on decommissioning