Quick answer: In the ordinary university–industry arrangement the company claims, not the university. The R&D Tax Incentive is only available to an eligible R&D entity — broadly, a company — and the activities must be conducted for that company. An exempt entity cannot be an R&D entity at all, which is the usual position for public universities and institutes, although a body's status depends on its own tax position. Many universities and institutes also appear on the Registered Research Service Provider register. Where total notional R&D deductions are below $20,000, an offset may still be available for qualifying expenditure incurred to a non-associate RSP for services within a research field for which it is registered.
As at 27 July 2026, the Australian Government had announced reforms to the R&D Tax Incentive in the 2026–27 Federal Budget, intended to apply to income years starting on or after 1 July 2028. Until those changes take effect, the program continues to operate under the current legislation.
Most university–industry projects run on a comfortable assumption: the university handles “the research side”, the company handles “the tax side”, and the R&DTI sorts itself out at year end. It does not. The incentive attaches to a particular taxpayer doing particular activities, and how the engagement is structured and carried out can materially affect whether the company can claim the expenditure.
The Short Answer: The Company Claims, and the Institution Generally Cannot
Two rules do the work.
First, only an R&D entity can claim.
Under Division 355 of the Income Tax Assessment Act 1997, an R&D entity is broadly a body corporate incorporated under an Australian law (or a foreign-incorporated Australian resident, or a foreign company here through a permanent establishment under a double-tax agreement). Then a hard stop: "an exempt entity cannot be an R&D entity" (s 355-35(3) ITAA 1997) (legislation.gov.au). Whether a particular university or institute is exempt turns on that body's own tax status — but it is why the incentive is generally not the research partner's to claim. Entity-eligibility decisions sit with the ATO.
Second, the RSP framework allows companies to engage registered research organisations to provide research services on their behalf.
A stated object of Part III of the Industry Research and Development Act 1986 is “to improve access for small and medium R&D entities to quality research services by maintaining a register of research service providers”.
The usual structure is therefore that an eligible company engages the institution to supply research services, while the company registers the activities and claims the offset, provided the activities are conducted for it and the remaining requirements are met.
The Condition That Quietly Decides It: Conducted for You
Getting the entity right is not enough. For the ordinary domestic case, the law requires the R&D activity to be "conducted for the R&D entity solely within Australia" (s 355-210(1)(a) ITAA 1997; separate limbs cover overseas activities with a finding and activities conducted for certain foreign group companies).
It then adds a trap university agreements walk into more often than any other kind: an activity is not covered "if the activity is conducted, to a significant extent, for one or more other entities" not otherwise covered by that subsection (s 355-210(2)).
Why the agreement matters: That is where co-ownership of results, publication rights and control of the work program stop being housekeeping and become an eligibility question. If the agreement leaves the institution owning the results or free to steer the work toward its own research agenda, a reviewer can reasonably ask who the activity was really conducted for.
Those terms are normal in academic collaboration — but they need reconciling with the condition before work starts.
The Route Most SMEs Miss: The RSP Register
RSPs are, in business.gov.au's words, "scientific or technical service providers that you can engage to conduct R&D activities on your behalf", and "all RSPs must be registered with the Department of Industry, Science and Resources (the department) before they can provide R&D services under the R&DTI" (business.gov.au — get help from an RSP).
One of the three categories the department recognises is publicly controlled RSPs — "tertiary education institutions (universities and TAFEs), government research organisations and entities owned and controlled by these organisations" (business.gov.au — register as an RSP). Your university partner may already be on it.
How to check — and what a name does not prove. The department publishes a searchable list, filterable by research field, location and provider name — "a list of current and previously registered research service providers" (business.gov.au — find an RSP). Adelaide readers will recognise entries such as Adelaide University, Flinders University, Flinders Partners Pty Ltd and South Australian Health and Medical Research Institute Limited, alongside national names such as CSIRO — but a name on that list does not establish that the body is registered now. It carries lapsed and superseded entries too, including legacy university entities alongside their successors.
Confirm registration year & research field. Confirm two things yourself: that the registration is current for the income year in which your R&D activities actually happen, and that it covers the research field your work falls in. Registrations "are valid for one financial year (1 July to 30 June) and must be renewed each year by 31 May" (business.gov.au), so the status at signing need not be the status in the year you claim. Fields follow the Australian and New Zealand Standard Research Classification, so you want a specific code — "4003 Biomedical engineering", "4611 Machine learning" — not a general impression of competence.
Confirm the exact legal entity. One further point: the registered entity may not be the university itself. Several entries are commercialisation companies — “UNISA VENTURES PTY LTD”, “UNIQUEST PTY LIMITED” and “The University of Newcastle Research Associates Limited (TUNRA)”. If you intend to rely on the provider's RSP registration, confirm that the contract and invoices relate to the exact registered legal entity.
Control, Results and Background IP
Registration also carries ongoing conditions on the provider, in section 3.02 of the Industry Research and Development Regulations 2022 (legislation.gov.au). Two line up with the "conducted for" question:
Control of services: the services must be "controlled by the R&D entity" (reg 3.02(2)(b)).
Rights to results: the provider must ensure each R&D entity "owns, or has a right to use, all results of those services", including any it subcontracts (reg 3.02(2)(f)).
That is a condition on the provider's registration, not a rewrite of your contract — and its subject is the results supplied to you. It says nothing about background IP: the know-how, platforms, datasets and patents each side already owned. Who owns that background IP, and on what licence terms, is an important commercial issue to settle in the research agreement.
What the $20,000 Threshold Exception Actually Does
The general rule: to be eligible for an offset, your total notional R&D deductions for the income year must generally be at least $20,000. Where the total is below $20,000, the offset base is generally limited to qualifying contracted expenditure incurred to a non-associate RSP for services within a field for which it is registered, together with eligible CRC Program contributions. Other in-house amounts do not automatically form part of that below-threshold offset base.
The accurate statement: RSP-conducted eligible R&D activities can be claimed even where the usual $20,000 R&D expenditure threshold is not met — not that an RSP "waives" the threshold. Nothing is waived; the base is re-specified, and narrower.
business.gov.au is explicit that using an RSP does not guarantee your activities will be eligible and that you still self-assess even if you use one — or, as we put it to clients: using an RSP does not guarantee eligibility — you still self-assess.
Worked Example (Illustrative Only)
Figures are illustrative to show the mechanics, not a promised outcome. Eligibility depends on your facts and you self-assess.
An Adelaide medtech company — aggregated turnover well under $20 million, a 25% base-rate entity — runs its first year of experimental work with a university lab. It pays the institution $11,000 within a field the institution is registered for and spends $3,000 of its own engineer's time on the same activities: $14,000 of notional deductions, below the threshold.
Without RSP or CRC expenditure
There is nothing in the s 355-100(2) table to substitute, so a $14,000 year produces no offset.
With the $11,000 incurred to a registered non-associate provider
The offset is worked out as if the total were $11,000. At the company tax rate plus 18.5 percentage points — 43.5% for a 25% base-rate entity, per the ATO's published rates (ATO — rates of R&D tax incentive offset) — that is roughly $4,785. The $3,000 of internal time is not in the base that year. And "refundable" does not mean a cheque for the full amount arrives: the offset is applied first against income tax payable, and only the remainder is paid out.
Where aggregated turnover is $20 million or more, or the company is controlled by one or more income-tax-exempt entities, the offset is non-refundable and the premium is tiered: the company tax rate plus 8.5 percentage points up to the 2% R&D intensity threshold, and 16.5 percentage points above it. The premium falls away past $150 million of notional deductions in an income year — for that excess the rate drops back to the company tax rate (same ATO source).
Two Different Questions: Who Conducts the Research, and Who Controls the Claimant?
The refundable tier is not settled by turnover alone. The ATO describes the entities eligible for the refundable offset as those that "have an aggregated turnover of less than $20 million per annum" and "are not controlled by income tax-exempt entities" (ATO — rates of R&D tax incentive offset; s 355-100 ITAA 1997).
Keep these conditions separate: Keep that condition separate from everything above, because the two are routinely confused. It turns on actual equity, control or connection relationships between your company and exempt entities — who owns and controls the claimant.
Contracting vs Control: It does not turn on who does your research: engaging a university as a service provider and paying it commercial fees is not itself a control relationship, and a company can contract with a public institution and sit wholly outside the condition. It bites in the separate case of an exempt entity holding equity in or otherwise controlling your company. That is a shareholder-register question for your tax agent, not a research-agreement one.
Before the First Invoice: Six Things to Settle
Question
Why it matters
Where it comes from
Is the registration current for the income year your R&D happens, and for the right field?
The published list includes previously registered providers; registrations run 1 July–30 June and renew by 31 May
s 355-100(2) item 1(c) ITAA 1997; business.gov.au
Which legal entity are you contracting with?
Some entries are commercialisation companies, not the university itself
RSP register
Is the provider an associate of your company?
The below-threshold route excludes expenditure to an associate RSP
s 355-100(2) item 1(b) ITAA 1997
Who owns or may use the results, including subcontracted ones?
The provider must ensure the R&D entity owns or may use all results
reg 3.02(2)(f), IR&D Regulations 2022
Who owns the background IP, and on what licence terms?
Not covered by the registration conditions — settle it before work starts
Research agreement (commercial, not regulatory)
Who controls the work program, and who else is it being done for?
Services must be controlled by the R&D entity; activity conducted to a significant extent for another entity falls outside the condition
reg 3.02(2)(b); s 355-210 ITAA 1997
One further option: an RSP that provides, has provided or will provide services relating to an activity may apply for an advance finding on behalf of an R&D entity, with the entity's written consent. An advance finding is a legally binding decision on whether the specified activities are eligible core or supporting R&D activities; it does not determine every other aspect of the entity's claim.
What the 2026–27 Budget Proposed
The 2026-27 Budget announced proposed R&DTI changes for income years starting on or after 1 July 2028. They are not current law; see our dedicated Budget update for the proposed measures and their status. Nothing in them changes what you do this income year.
Where Ignition Research Sits
We are an Adelaide-based Registered Research Service Provider (RSP000047) at Lot Fourteen, registered under the same Division 4 of Part III of the IR&D Act the universities on the register hold, and subject to the same conditions on control and ownership of results. We are not a registered tax agent: your claim position, registration lodgement and tax return are for your own adviser. We assist with research design and the conduct of R&D activities, including defining the experimental approach and establishing contemporaneous evidence systems — see what an RSP is.
Frequently Asked Questions
Q: Can I claim the R&D Tax Incentive for research work done by a university?
A: Potentially yes — the R&DTI is claimed by an eligible R&D entity (broadly, a company) for eligible activities conducted for it. Paying a university to do the work does not by itself disqualify you, but the arrangement must satisfy the s 355-210 ITAA 1997 condition that the activity is conducted for your company. You self-assess.
Q: Can a university claim the R&D Tax Incentive itself?
A: Generally not. The offset is only available to an R&D entity, and s 355-35(3) ITAA 1997 says an exempt entity cannot be an R&D entity. That is why public research organisations typically participate as providers: the register exists to improve access to research services for small and medium R&D entities (s 26(c), IR&D Act 1986).
Q: How do I check whether my research partner is a Registered Research Service Provider?
A: Search the department's public list on business.gov.au — but it covers current and previously registered providers, so a name is not proof of current registration. Confirm three things: the registration is current for the income year your R&D happens, it covers your research field, and you have the exact legal entity (some entries are commercialisation companies, not the university).
Q: Do I still need to spend $20,000 if I pay a Registered Research Service Provider?
A: RSP-conducted eligible R&D activities can be claimed even where the usual $20,000 R&D expenditure threshold is not met. Under s 355-100(2) ITAA 1997, where total notional deductions are below A$20,000, the offset base is generally limited to qualifying expenditure incurred to a non-associate RSP for services within a field for which it is registered, together with eligible CRC Program contributions; other in-house amounts do not automatically form part of that below-threshold offset base. Using an RSP does not guarantee eligibility — you still self-assess.
Sources & Further Reading
business.gov.au — Find a research service provider (the register)
legislation.gov.au — Industry Research and Development Act 1986
legislation.gov.au — Industry Research and Development Regulations 2022
Related: what an RSP is · claiming R&D under $20,000 · the proposed $50,000 Budget measure · the R&DTI in Adelaide
Talk to Ignition Research before signing the research agreement. Addressing the ownership, control, contracting-entity and research-field questions at the drafting stage can reduce the need for later amendments and support a clearer eligibility assessment. Get in touch.
Note: this article describes the current rules. Changes proposed in the 2026–27 Federal Budget for income years starting on or after 1 July 2028 are not yet law.
This article provides general information only and does not constitute tax, legal or financial advice. Eligibility for the R&D Tax Incentive depends on the specific entity, activities, expenditure and circumstances involved. Businesses should assess their circumstances against the legislation and current official guidance and obtain independent professional advice where appropriate.
