We're a Baker Tilly network member
About Baker Tilly
Back to top
Accessing R&D tax incentives for overseas findings
Technical article

Accessing R&D tax incentives for overseas findings

Organisations that have undertaken R&D activities in foreign jurisdictions in the year ending 30 June 2020 may be eligible to claim the R&D tax incentive.

While there is typically a 30 June deadline to apply for an overseas finding, disruption from COVID-19 means R&D entities now have until 30 September 2020 to submit their overseas finding, provided they make a provisional application by 30 June 2020.

When can overseas activities be included in an R&D tax incentive claim?

Broadly, only R&D activities conducted in Australia are eligible to qualify for the R&D tax incentive. However, where certain conditions are satisfied an entity’s overseas R&D activities may also qualify for the incentive. To make a claim in relation to overseas R&D activities, entities are required to apply to the Department of Industry, Science, Energy and Resources (AusIndustry) for an overseas finding. R&D entities are required to submit an overseas finding application prior to the end of the income year in which the expenditure has been incurred.

If an overseas activity is not covered by a current overseas finding, an R&D entity is only permitted to claim ancillary and incidental expenditure incurred overseas on eligible R&D activities (i.e. minor overseas travel).

When can overseas activities be included in an R&D tax incentive claim?

Before applying for an overseas finding, an R&D entity must meet all of the following conditions:

Condition 1: The overseas activity must be an eligible R&D activity.

Condition 2: The overseas activity must have a significant scientific link to an eligible core R&D activity that has been undertaken solely within Australia.

Condition 3: The overseas activity cannot be performed in Australia for one of the following reasons:

(a) undertaking the activity requires access to a facility, expertise or equipment not available in Australia;

(b) undertaking the activity in Australia would contravene a law relating to quarantine;

(c) undertaking the activity requires access to a living population that is not available in Australia or

(d) undertaking the activity requires access to a geographical or geological feature that is not available in Australia.

Condition 4: The total actual and reasonably anticipated expenditure incurred in all income years on the overseas activities is estimated to be less than the total expenditure incurred on the activities undertaken solely in Australia. This assessment is made at the time the R&D entity is looking to apply for an overseas finding.

When considering an overseas finding, AusIndustry thoroughly examines the reasons why the R&D entity is looking to conduct part of its R&D activities overseas and will only issue a positive finding where it is satisfied that the R&D entity could not access the necessary expertise and facilities here in Australia. Importantly, cost efficiency would not, of itself, be sufficient to justify an overseas finding in respect of R&D activities overseas.

Timing is critical

As outlined above, a R&D entity is required to prepare and lodge an overseas finding application with AusIndustry before the end of the first income year in which the activities are undertaken.

As a business support measure due to COVID-19, AusIndustry will be accepting provisional applications for income years ending 30 June 2020 before 30 June 2020. However, the R&D entity will be required to provide all further information required to assess the application prior to 30 September 2020.

The overseas finding does not replace the annual R&D tax incentive application and the R&D entity must, therefore, continue to register R&D activities covered in a provisional application within 10 months after the end of the income year in which the activities are undertaken.

Documentation is important

Contemporaneous documentation must be maintained to demonstrate how the R&D entity meets each of the four conditions outlined above. In our experience, this documentation is critical to obtaining a positive ruling from AusIndustry in relation to an overseas finding application.

What are the next steps?

Pitcher Partners can assist you I to determine whether your organisation satisfies the key eligibility requirements for an overseas finding, and can assist with preparing and lodging an overseas finding application, identifying eligible expenditure and reviewing documentation to determine whether it satisfies the requirements of  both regulators (AusIndustry and the Australian Taxation Office).

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

Pitcher Partners insights

Get the latest Pitcher Partners updates direct to your inbox

Thank you for you interest

How can we help you?

Business or personal advice
General information
Career information
Media enquiries
Contact expert
Become a member
Specialist query
Please provide as much detail to ensure appropriate allocation of your query
Please highlight a realistic time frame that will enable us to provide advice within a suitable and timely manner. Please note given conflicting demands with our senior personnel, we will endeavour to respond to you within the nominated time frame. If you require an urgent response, please contact us on 03 8610 5477.
Responses to queries submitted via this form (“Response”) are produced by Pitcher Partners Advisors Proprietary Limited and are prepared for the exclusive use and benefit of those who are invited, and agree, to participate in the CRITICAL POINT NETWORK service. Responses provided, or any part thereof, must not be distributed, copied, used, or relied on by any other person, without our prior written consent. Any information provided is intended to be of a general nature and prepared without taking into account your objectives, circumstances, financial situation or particular needs. Any information provided does not constitute personal advice. If you act on anything contained in a Response without seeking personal advice you do so at your own risk. In providing this information, we are not purporting to act as solicitors or provide legal advice. Any information provided by us is prepared in the ordinary course of our profession and is based on the relevant law and its interpretations by relevant authorities as it stands at the time the information is provided. Any changes or modifications to the law and/or its interpretation after this time could affect the information we provide. It is not possible to guarantee that the tax authorities will not challenge a transaction or to guarantee the outcome of such a challenge if one is raised on the basis of the information we provide. To the maximum extent permitted by law, Pitcher Partners will not be liable for any loss, damage, liability or claim whatsoever suffered or incurred by any person arising directly or indirectly out of the use or reliance on the information contained within a Response. We recommend you seek a formal engagement of our professional services to consider the appropriateness of the information in a Response having regard to your objectives, circumstances, financial situation or needs before proceeding with any financial decisions. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.
CPN Enquiry
Business Radar 2025
Dealmakers 2025
Federal Budget 2025-26
Search by industry