The following types of expenditure and depreciation loss are not eligible for the R&D tax credit.
Types of ineligible expenditure
The GST input portion of the expenditure
This is the amount of GST input tax you have claimed on your expenditure if you are registered for GST.
Expenditure belonging to someone else
You cannot claim someone else's expenditure.
Amounts under the $50,000 or over the $120 million thresholds
- Amounts incurred by a person and their associates on R&D to the extent the amounts exceed $120 million or the individual's approved cap.
- If an individual's eligible expenditure is less than $50,000, expenditure or loss under $50,000 that is not for an approved research provider to perform an R&D activity on behalf of the person.
Depreciation related exclusions
- Expenditure that contributes to the cost of depreciable tangible property.
- Expenditure incurred in acquiring depreciable property.
- Depreciation on property, to the extent the cost of the assets are eligible R&D expenditure.
- Depreciation on pooled property where an item in the pool is not used solely in performing R&D.
- Depreciation arising from an asset being written off or sold below its adjusted tax value.
Exclusions related to associated persons.
- Certain amounts of depreciation on property acquired from associates.
- Profits on R&D services and property provided by associates.
- Amounts in excess of market value for leasing property from associates.
Exclusions for the cost of land, financing costs, professional fees, and expenditure to commercialise the results of R&D
- Expenditure to purchase land.
- Interest and other financing costs.
- Professional fees in determining a person's entitlement to an R&D tax credit.
- Expenditure to commercialise the results of an R&D activity.
Intangible property (other than software), software related exclusions and ineligible technology
- Expenditure on acquiring an interest in intangible property other than software.
- Expenditure on bespoke software.
- Internal software development expenditure incurred by a person and their associates, to the extent it exceeds $25 million.
- The cost of acquiring technology that is used as a basis for further R&D activities.
Market value related exclusions including feedstock
- Expenditure on goods or services to the extent it exceeds the market value of the goods or services.
- Expenditure on inputs used, or subject to a process or transformation, to the extent the expenditure does not exceed the value of the output from that expenditure (feedstock rule).
Tax credits from another country, gifts and grants
- Expenditure for which a person has received an R&D tax credit from another country.
- Expenditure that relates to a government or local authority grant.