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Media coverage of business response to proposed R&D Tax Changes announced in May Budget

In the Federal Budget handed down on 12 May 2026, The Government proposed major structural changes to the R&D Tax Incentive (RDTI). These changes are proposed to commence on 1 July 2028.

Proposed reforms include:

• Increasing the offset for experimental ‘core’ R&D by around 25 to 50 per cent and removing eligibility for expenditure that only supports R&D. The intensity threshold will reduce from 2 per cent to 1.5 per cent, providing higher offsets to firms undertaking substantial core R&D. Expenditure on supporting activities – such as literature review and equipment maintenance – will no longer be eligible.
• Changing the eligibility criteria for the Refundable R&D Tax Offset by increasing the turnover threshold to $50.0 million. Refundability will now also be limited to firms operating less than ten years, with older firms eligible for an equivalent, non-refundable offset.
• Increasing the maximum expenditure threshold to $200.0 million to allow large businesses to claim more.
• Improving assurance around small claims by increasing the minimum expenditure threshold to $50,000, with R&D below this required to be undertaken with a Research Service Provider or Cooperative Research Centre.

Since the release of the Budget, corporate and tax advisory sectors have actively analysed and commented on how these proposed adjustments will impact Australian businesses. While the increased turnover threshold and larger expenditure caps are welcome, a massive wave of concern has emerged from Australia’s deep-tech, space, and life science sectors regarding the unexpected introduction of the 10-year age cap on eligibility or the Refundable R&D Tax Offset:

Within great coverage published by Capital Brief:

• Tesla chair (and leader of The Government’s recent review of R&D) Robyn Denholm told Capital Brief that the budget measures were “a critical first step toward growing the economy and driving national productivity and creating meaningful opportunities for the next generation of Australians”. However Robyn has also urged The Government to find other ways to support companies caught on the wrong side of an unexpected budget tweak that biotech companies and deep tech startups fear will starve them of critical funding.
• Melbourne-based biotech company Cartherics is approximately 10 years old and develops off-the-shelf immunotherapies for ovarian cancer, triple-negative breast cancer, and endometriosis. Chief executive Ian Nisbet reported to Capital Brief that biotech companies are often just getting started after a decade. If they are lucky, they are only just entering clinical trials, a phase where they begin to incur massive expenses without any incoming revenue. The company also reported that their advanced R&D loan structure has been thrown into doubt by this proposal.
• Steve Burnell, managing director of Andrew Forrest’s venture arm Tenmile, echoed these concerns. Burnell via Capital Brief stated that “The R&D Tax Incentive changes are promising in principle, but the most material improvements don’t kick in until July 2028, and the hidden kicker is capping the eligibility to companies less than ten years old.”  “This will disproportionately impact life science startups and other sectors like deep tech that have very long R&D journeys and commercialisation pathways — often greater than ten years to revenue. This aspect must be a focus of consultation, requiring perhaps a sector-based exemption.”
• AusBiotech chief executive Rebekah Cassidy has stressed how the 10-year cap fundamentally misunderstands the sector’s commercialisation timelines. “The simple reality is, it generally takes longer than 10 years to bring what are highly complex, heavily regulated, life changing and saving biotech products to market,” Cassidy told Capital Brief.
• Via Capital Brief, a combination of deep-tech startups firms including Gilmour Space, Myriota and Quantum Brilliance, have called for exemptions and policy carve-outs to protect priority sectors from unexpected changes, including the 10 year limit to Refundable Offsets.

Writing for SmartCompany, Sam Ringwaldt, co-founder of Conroy Tech has argued how the 2026 Budget fails real innovators and will disadvantage early-stage hardware start ups. Ringwaldt posits that whilst the Budget intends to support innovation, the revisions to the R&D Tax Incentive are incredibly detrimental to the financial circumstances of deep tech founders. Ringwaldt has stated that “The government’s policy rewards speed, but deep tech is not fast. That is the point.”

Swanson Reed has also made comments in InnovationAus and Capital Brief expressing our concerns on the proposal to limit Refundable Offsets for companies less than 10 years old.

Because these proposals are not yet legislated and are slated for a July 2028 implementation, companies should be reviewing the impact of these proposed changes on their cashflows and where possible engaging with The Government to consult on the proposed changes.

Swanson Reed will provide updates as information becomes available and we will continue to advocate for a sustainable and stable R&D Tax Incentive.

Please get in touch with our office if you require assistance, would like to speak to someone about a potential claim, or check out our website for more information.