R&D Tax Incentive for AU EPC, Solar and Renewables Operators: Eligibility, Registration Timing and the 43.5% Refundable Offset
Updated: 2 days ago
By Rami Rajkumar, CPA, Founder & Partner, TechEdge Accounting. Updated 6 October 2026.
The short version. The R&D Tax Incentive gives companies with aggregated turnover under $20 million a refundable tax offset equal to their corporate tax rate plus an 18.5% premium. For a base rate entity taxed at 25%, that's 43.5% of eligible R&D spend. You must register your activities within 10 months of the end of the income year, so FY26 activities need to be registered by 30 April 2027. The Government has also announced bigger changes from 1 July 2028, covered below.
Key points:
Two kinds of activity can qualify: core R&D (experimental, hypothesis driven) and supporting R&D (directly related to a core activity).
Under $20 million turnover the offset is refundable. Above that it's non-refundable, at your corporate tax rate plus 8.5% or 16.5% depending on how R&D intensive you are.
Documentation needs to be built as the work happens: hypothesis, plan, timesheets, results. Paperwork pieced together afterwards often doesn't hold up.
The most commonly missed cost is founder time. If you personally do the R&D work and are paid for it, that cost can be eligible.
The R&D Tax Incentive is one of the most generous programs available to Australian businesses, and EPC, solar and renewables operators under-claim it more than most. A solar installer with $200,000 of eligible spend on genuine battery integration R&D could be looking at an offset of about $87,000. A renewables developer with $1 million of eligible activity could be looking at $435,000. Those numbers only arrive if you understand eligibility, register on time and keep the right records.
This guide is written for project-based businesses in construction, EPC, solar, renewables and carbon. It focuses on what tends to qualify in these industries and what doesn't.
How the program works
The R&D Tax Incentive is run jointly by the Department of Industry, Science and Resources (which registers your activities) and the ATO (which handles the offset in your tax return). There are three steps:
Register your R&D activities through the R&D Tax Incentive portal within 10 months of the end of the income year in which they took place. For FY26 (ending 30 June 2026) that's 30 April 2027.
Work out and substantiate the eligible expenditure on those registered activities: salaries, contractor fees, materials used up in experiments, decline in value of plant used for R&D, and a share of overheads.
Claim the offset in your company tax return using the R&D Tax Incentive schedule.
If your aggregated turnover is under $20 million and the offset is more than your tax bill, the difference is refunded in cash.
What counts as eligible R&D
Core R&D activities
Experimental activities where:
the outcome can't be known or worked out in advance from existing knowledge,
the work follows a systematic progression: hypothesis, experiment, observation, evaluation, conclusion, and
the purpose is to generate new knowledge, including new or improved materials, products, devices, processes or services.
Supporting R&D activities
Activities directly related to a core R&D activity. Some supporting activities, such as those that produce goods or services, or fall into the excluded categories, also have to be done for the dominant purpose of supporting the core activity. Test installations, performance monitoring and validation work on EPC and solar projects often sit here.
Patterns that can qualify in our industries
Solar installers
Battery integration into existing systems where the approach is genuinely new, such as testing different inverter, battery and monitoring set-ups to improve self-consumption or peak shaving
Bifacial panel installation methods at scale in Australian conditions where existing knowledge doesn't predict the result
Solar and EV charger integration testing different load management approaches
Microgrid testing on commercial sites with a new topology
EPC contractors
New construction or commissioning methods where sequencing under unusual conditions can't be predicted
BIM to physical build process improvements where the digital twin approach is genuinely new
Energy storage installation methods on heritage or constrained sites
Smart grid commissioning with new protection settings
Renewables developers
Site selection models combining solar, wind and hybrid optimisation under specific Australian conditions
Yield forecasting models tuned to Australian climate patterns where existing models fall short
Curtailment management strategies for grid-connected projects
Bird and bat impact mitigation trials for wind sites
Carbon project operators
New measurement approaches for ACCU projects, such as soil carbon or vegetation, where the method itself is new
Monitoring, reporting and verification protocols for emerging project types
Whether any of these actually qualify depends on the facts. The question is always whether the outcome could have been known in advance by a competent professional in the field.
What usually doesn't qualify
The most common reason claims fail is that the work was business as usual rather than experimental. Complex or difficult work isn't R&D just because it's hard.
Things that generally don't qualify:
Standard solar installation work, even on a tricky site
Cost engineering existing methods where the outcome is broadly predictable
Following manufacturer specifications or standard configurations
Market research and customer surveys
Quality checks on completed work
Repairs and warranty work
"Innovation" described after the fact, with no hypothesis written down before the work started
What expenditure to capture
Eligible expenditure on registered activities can include:
Salaries and wages for staff working directly on R&D, backed by timesheets
Contractor fees for external specialists working on the R&D
Materials used up in experiments, such as batteries, panels or equipment consumed in testing and not sold
Decline in value of plant used for R&D, apportioned for R&D use
Overheads, on a reasonable apportioned basis
The cost we see missed most often is founder time. If you personally spend part of each week on genuine R&D and you're paid a salary, the share of that salary relating to R&D can be eligible. Many owners miss out because they don't pay themselves a wage or don't track their hours.
Records to keep
Keep records that show what you did, why, and what it cost:
An R&D plan or hypothesis for each project, written before the work starts
Activity logs that show the experimental process
Timesheets splitting staff hours between R&D and normal work
Test results and observations
An evaluation recording what was learned and the conclusion reached
Expenditure records linking actual spend to the registered activities
Building these as you go is the single biggest factor in a claim that holds up if it's reviewed.
Registration timing
You have 10 months from the end of the income year to register. For activities in FY26 (1 July 2025 to 30 June 2026), the deadline is 30 April 2027.
We suggest registering well before that, once your year-end accounts are finalised. That gives you time to:
calculate eligible expenditure properly,
write up the activities clearly, and
have your accountant or R&D adviser review the registration before it goes in.
Don't leave it until the last week of April. Mistakes are harder to fix under deadline pressure.
A worked example
A solar installer with $4 million aggregated turnover is a base rate entity taxed at 25%. It spent $180,000 on eligible R&D in FY26 testing a new battery integration method. Its tax for the year before any R&D offset is $25,000.
Eligible R&D expenditure: $180,000
Offset rate (25% tax rate plus 18.5% premium): 43.5%
R&D tax offset: $78,300
Used against the tax bill: $25,000
Refunded in cash: $53,300
This is simplified. In a real claim the R&D expenditure isn't also deducted as a normal expense, and other offsets and adjustments can change the result, so get the calculation done properly.
What's changing from 1 July 2028
In the 2026-27 Federal Budget (12 May 2026), the Government announced changes to the R&D Tax Incentive starting 1 July 2028. At the time of writing the ATO says the measure is not yet law. As announced, the changes include:
Supporting R&D activities would no longer be eligible, while the offset for core activities would rise by 4.5 percentage points
The R&D intensity threshold for the higher premium would fall from 2% to 1.5%
The turnover threshold for the refundable offset would rise from $20 million to $50 million
The refundable offset would be limited to a company's first 10 years of operation
The minimum annual expenditure would rise from $20,000 to $50,000
The expenditure cap would rise from $150 million to $200 million
For EPC and solar businesses that rely heavily on supporting activities like test installations and monitoring, the first change matters most. If you're planning R&D that runs past mid 2028, it's worth looking at how your activities are structured now. See the ATO's page on better targeting the R&D Tax Incentive for the current status. Treasury released draft legislation on 11 September 2026, and we've set out what the changes mean for EPC and solar claims, with five things to check now, in R&D Tax Incentive changes from 1 July 2028.
Common mistakes we fix
1. Not registering at all. The business did genuine R&D but didn't know the program existed, and lost the whole offset.
2. Registering after the deadline. FY26 activities registered in May 2027 are too late. The claim for that year is gone.
3. Claiming business as usual as R&D. This is an audit risk. If your "R&D" looks like normal project work, get a specialist review before you claim.
4. No hypothesis written before the work. The experimental requirement isn't optional, and documents written afterwards often don't hold up.
5. Founder time not captured. The founder does the experimental work but isn't paid a wage, so there's no cost to claim. Paying a director's salary and keeping timesheets fixes this.
6. R&D costs mixed in with everything else. If R&D spend isn't separated in the general ledger, nobody can trace it later. Set up R&D project tagging from day one.
When to bring in an R&D specialist
For a first claim with more than about $100,000 of expenditure, it's usually worth engaging a specialist R&D adviser alongside your accountant. Their fee is often a percentage of the benefit or a fixed fee, and in return you get a better prepared registration and support if the claim is reviewed.
For smaller claims, your accountant can often handle the registration and claim directly.
Where this fits in a TechEdge engagement
Finance Manager (from $2,750/mo): an R&D eligibility check at the start, basic record keeping set up, and eligible spend captured month by month.
Financial Controller (from $4,950/mo): all of the above, plus help drafting R&D plans, preparing the registration, calculating the claim and getting ready for any review.
Head of Finance (from $8,500/mo): all of the above, plus multi-year R&D planning, coordinating specialist advisers, ATO rulings on borderline activities, and R&D budgeting for strategic decisions.
Related reading
Take the Maturity Audit
Five minutes and twelve questions. We'll come back with a recommendation within 48 hours, including a flag if your business may have unclaimed R&D tax potential. Take the Maturity Audit
This article is general information only and is not financial, tax or legal advice. R&D Tax Incentive eligibility depends on your facts. Rules reflect the position as at 6 October 2026; check business.gov.au and the ATO, or speak to your adviser, before you register or claim.
About the author
Rami Rajkumar, CPA is the founder of TechEdge Accounting in Hawthorn, Victoria, an outsourced finance office for Australian construction, EPC, solar, renewables and carbon businesses. Take the 5-minute Maturity Audit
Comments