Claiming the R&D Tax Incentive for work conducted outside Australia is possible but only if you first obtain a Positive Overseas Finding from AusIndustry. This process is strict and requires strong evidence that your overseas activities are essential and cannot reasonably be conducted in Australia.
The Key Requirements – You Must Meet all Four to be Eligible
To be eligible, your overseas activities must:
- Qualify as core or supporting R&D activities.
- Have a direct and scientifically‑based connection to your Australian core R&D activity.
- Be demonstrated as necessary to progress the Australian R&D, meaning the Australian activity cannot be completed without the overseas component.
This scientific dependency must be clearly explained in your Overseas Finding application.
2. Unavailability in Australia
You must prove that the activity cannot reasonably be conducted in Australia due to:
- Required facilities, equipment, technology, or scientific expertise not being available locally.
- Need for specific environmental, geographical, or geological conditions present only overseas.
- Regulatory restrictions (e.g., quarantine laws) preventing the activity from occurring in Australia.
3. Cost Balance Requirements
The R&D Tax Incentive is designed to prioritise Australian R&D expenditure. As such, your expenditure on overseas R&D activities must be less than your Australian R&D expenditure over the entire life of the project.
4. Critical Timing & Validity Period
Timing is strict and non‑negotiable:
- Overseas Finding applications must be submitted before the end of the income year in which the activity occurs.
- Late applications cannot be accepted.
No extensions, exemptions, or discretion apply. - Positive Overseas Findings are valid only for the duration of the approved activity.
- Register all R&D activities annually with AusIndustry, and
- Lodge the claim through the company tax return to receive the offset.