How the R&D Tax Incentive works for genuinely experimental AI/software R&D — up to 43.5% for companies under $20M turnover — with the important caveat that a registered adviser determines eligibility.
dgm is an independent osFoundry integration partner — not affiliated with osFoundry’s maker (OS LLC), and dgm has no completed client integrations yet.
The R&D Tax Incentive (RDTI) is Australia’s largest R&D support, and genuinely experimental AI and software work can qualify. It is the single most important program to understand.
| Item | Detail |
|---|---|
| What it is | A tax offset on eligible R&D expenditure |
| Refundable (under $20M turnover) | Up to 43.5% (25% rate + 18.5% premium), cash-refundable |
| Non-refundable ($20M+) | 38.5% base, rising with R&D intensity |
| Who runs it | AusIndustry (DISR) + the ATO, jointly |
How the R&D Tax Incentive works
The RDTI is a two-step program: register your eligible R&D activities with AusIndustry (DISR), then claim the eligible costs in your company tax return via the ATO R&D schedule. The R&D Tax Incentive offset is your corporate tax rate plus a premium, so the headline percentage depends on your tax rate: up to 43.5% for companies with aggregated turnover under $20 million (your 25% small-company rate plus an 18.5% premium, refundable), and a 38.5% base rising with R&D intensity for larger companies. Confirm the current rate and thresholds, as they can change. A $150 million expenditure cap applies to the premium.
What it means for AI
AI and software development can be eligible only where the work is genuine R&D — Core R&D activities (experiments whose outcome cannot be known in advance, conducted to generate new knowledge) plus Supporting activities. Routine programming, configuration, bug fixes and standard deployment generally do not qualify. Building an AI feature is not automatically R&D.
How to claim it
The RDTI is claimed by the business on its own tax return, usually with a registered R&D tax adviser or accountant — it is not applied for like a grant. Keep contemporaneous records from day one. Important: these are programs a business applies for directly with the government agency or, for the R&D Tax Incentive, claims through a registered tax adviser. dgm is an independent AI-integration agency — not a registered or approved program deliverer, an Industry Growth Program adviser, or a registered R&D tax agent. dgm can help scope and build the AI project; eligibility and any claim are determined and lodged by you or a registered adviser.
Where dgm fits
dgm is an independent integration partner that helps Australian businesses adopt osFoundry — scoping a first use case, handling the build, and connecting AI to the systems you already run. dgm can help you scope the AI project that a program would fund — but you apply to the program (or claim the R&D Tax Incentive with a registered adviser) directly. dgm is independent of osFoundry’s maker (OS LLC) and has no completed client integrations yet, so everything described here is a service offered, not a past result. If you want to scope a practical first project, dgm can help you map it out.