Home » News » R&D Tax Mentions in Commissioner of Taxation Annual Report 2024–25

R&D Tax Mentions in Commissioner of Taxation Annual Report 2024–25

The R&D Tax Incentive (R&DTI) is co-administered by two government agencies:

• 1: The Department of Industry, Science and Resources on behalf of Industry Innovation and Science Australia (IISA): The department registers companies for the R&DTI program and makes findings on the eligibility of R&D activities.
  • and
• 2: The Australian Taxation Office (ATO):  The ATO is responsible for administering R&DTI expenditure claims, and conducts reviews and audits on substantiation of claims and other matters.

The Commissioner of Taxation’s Annual Report 2024–25 was published in late October 2025. This annual report informs parliament, stakeholders and the community about ATO performance for the past financial year.

Some extracts from the Annual Report 2024–25 specifically related to the R&D Tax Incentive include:

• The ATO actively manages the risk of non-compliance with tax laws that govern refundable R&DTI offsets. The measure demonstrates the ATO has processes and controls in place to help identify where fraudulent and ineligible claims of refundable R&DTI offsets are made by taxpayers in their company income tax return. The ATO monitors the operation of these processes and controls to ensure they are working as intended and performing to expected standards. Where deficiencies are found, the ATO reviews and implements changes to improve its performance. During 2024–25, we reviewed our controls and confirmed they operated as expected;
• The ATO aims to ensure all company income tax returns that have claimed a R&DTI offset are amended when DISR issues a negative finding or revokes a company’s R&DTI registration. We apply processes to monitor impacted company tax returns when a relevant notification is received from DISR to ensure they are appropriately amended either by the company or the ATO. In the 2024–25 financial year, a total of 28 company income tax returns were required to be amended by a date falling within the financial year following decisions taken by DISR. Of these returns, 26 were amended and 2 could not be amended as DISR’s decisions were received outside legislative timeframes to amend. Accordingly, the ATO amended all company income tax returns that were within its power to amend. During 2024–25, the ATO has improved its internal processes and controls to help ensure that, where it is within the ATO’s powers, appropriate amendments are made to company income tax returns, following decisions taken by DISR.   

To our knowledge, the Australian Taxation Office (ATO) does not actively publish statistics of R&D Tax Disputes and litigation matters, however information regarding activity arising from ATO amended assessments could potentially be inferred for some companies by analysing the ‘Total amended R&D expenditure‘ section of the R&D Tax Transparency reports (however this field may also include company originated amendments).

Industry Innovation and Science Australia (IISA) usually provides updates on Legal matters and litigation relevant to R&D Registrations in the IISA annual report, which is usually released around late November each year.

Swanson Reed recognises the important role that the programme regulators (IISA and the ATO) play in maintaining the integrity of the R&D Tax Incentive. Effective compliance processes are key in maintaining the sustainability of the programme.

Companies claiming activities under the R&D Tax Incentive must ensure they have suitable documentation in place before claims are made, as unsubstantiated claims can be subject to reversal of R&D Tax Offset entitlements and the imposition of penalties.

The current regulator guidance is here:

• ATO guidance on expenditure documentation;
• DISER guidance eligible activities.

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.