The Seven RDTI Changes from the 2026 Budget, What They Mean and When They Start

By Alex Knight, Founder and CEO, Advanced

On 12 May 2026, Treasurer Chalmers handed down the 2026-27 Federal Budget. Buried inside it were the first major structural changes to the R&D Tax Incentive since the 2020-21 reforms.

Seven changes. None of them start until 1 July 2028.

That distinction matters more than most coverage has acknowledged. Your FY26 claim is governed by the existing rules. Your FY27 claim is governed by the existing rules. The current 43.5% refundable offset, the $20,000 minimum threshold, the eligibility of supporting activities, all of it applies for two more financial years before anything changes.

This article covers exactly what the seven changes are, who they help, who they hurt, and what FY27 means for a company with a material R&D program.

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The seven changes confirmed in the Budget

1. Offset rates increased by 4.5 percentage points

The headline measure. Core R&D offset rates increase by a flat 4.5 percentage points across the board from 1 July 2028. For companies currently on the 43.5% refundable rate, that becomes 48%. For companies on the non-refundable rate, a proportionally smaller relative increase.

Treasury described this as a 25 to 50% increase in support. The honest framing is a flat 4.5 point lift, the wide range reflects the same absolute increase producing different relative gains depending on starting rate.

2. Supporting R&D activities removed from eligibility

This is the change that does the most damage to early-stage founders.

Under current law, supporting R&D activities are activities directly related to core experimental work. They include data collection, prototype assembly, environment setup, and testing that enables the experimental process. They cannot exist without a core activity.

From 1 July 2028, supporting activities are out. Every dollar has to be argued as core experimental work, the most scrutinised, most contested category in the program. Early-stage companies whose claims include a material supporting component will see their eligible spend shrink without changing anything about what they actually do.

3. Refundable offset threshold lifted from $20M to $50M

A clean structural improvement. The $20 million turnover cliff has distorted scaleup behaviour for years, with companies managing growth to the threshold rather than through it. Lifting it to $50 million removes that distortion and brings a meaningful band of scaleups into the refundable offset.

4. Minimum expenditure threshold doubled from $20,000 to $50,000

Companies with eligible spend below $50,000 will only be able to claim through a Registered Service Provider or Cooperative Research Centre. Direct claiming requires $50,000 in eligible R&D.

Combined with the removal of supporting activities, this change is particularly sharp for early-stage companies. A founder doing legitimate experimental work below the new floor, or whose claim crosses the threshold only when supporting activities are included, loses access to the program directly.

5. Refundable offset limited to companies under 10 years old

From 1 July 2028, companies more than 10 years old lose access to the refundable offset and access only the non-refundable offset instead.

The intent is reasonable, older, established companies should graduate to offset against a tax liability. The execution misses the cohort that matters most: medtech companies navigating regulatory pathways, agritech businesses running extended field trials, climate hardware companies in long pilot phases. These companies are pre-revenue or low-revenue by the nature of their science, not by inattention. Many won't be fully commercial within 10 years.

6. Intensity premium threshold reduced from 2% to 1.5%

The intensity premium applies to companies spending more than a set percentage of total expenditure on R&D. Currently set at 2%, it drops to 1.5% from 1 July 2028. More companies will qualify for the premium rate. A modest improvement that benefits companies with significant R&D programs relative to their total operating costs.

7. Maximum eligible expenditure cap raised from $150M to $200M

The SERD report recommended removing the cap entirely. The Budget moved it from $150 million to $200 million. A step forward for large R&D programs, though smaller than what the sector was expecting.

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The CGT change that contradicts the RDTI package

The Budget also announced that the 50% CGT discount will be replaced with CPI indexation plus a 30% minimum tax on real capital gains, effective from 1 July 2027.

For a founder building a long-horizon innovation business, this means a materially higher tax on the exit. Founder equity is taxed harder. Angel and early-stage investor returns are taxed harder. The economics of backing the harder, slower work got worse at exactly the moment the RDTI package told everyone to do more of it.

The government has committed to consulting on how the CGT changes interact with incentives for early-stage and startup investment. That consultation has not yet concluded.

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What this means for FY27

The changes don't start until 1 July 2028. FY27, covering eligible R&D spend from 1 July 2026 to 30 June 2027, is governed by the existing rules in full.

For companies with a material R&D program, FY27 is the second of the two most valuable claiming years under the current structure. The 43.5% refundable offset applies. Supporting activities are still eligible. The $20,000 minimum threshold applies. There is no 10-year age limit.

For companies incorporated before July 2018, FY27 is likely the last full financial year with access to the refundable offset under the existing rules before the 2028 changes apply.

The direction of the program from 2028 is toward core experimental R&D, higher minimums, and tighter refundable access. For founders who have been treating the RDTI as a partial compliance exercise rather than an active capital strategy, FY27 is the year to close that gap.

For a framework on how to use the FY27 refund as a capital strategy rather than a compliance outcome, see the R&D Tax Incentive capital strategy guide.

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What needs to change before the legislation lands

Three changes would close the gap between what the Budget says about innovation and what it does for the companies trying to build it.

Keeping supporting R&D activities in the program. If the concern is overclaiming, the fix is better guidance and calibrated audit thresholds, not removing a category that legitimately represents a material portion of early-stage R&D claims.

Replacing the 10-year refundability sunset with a carve-out for longer-development industries, tied to industry classification using the same logic already in place for the National Reconstruction Fund and Future Made in Australia priorities.

Preserving targeted CGT treatment for genuine innovation assets before July 2027. Founder equity in a long-horizon innovation business should not carry the same tax treatment as a passive property investment.