What are the key changes proposed for Australia's Research and Development Tax Incentive?

The "Ambitious Australia" review, led by Tesla chairwoman Robyn Denholm, proposes pivoting the RDTI to prioritise "high-potential" start-ups through quarterly cash advances. It also recommends raising the minimum R&D expenditure threshold from $20,000 to $150,000 to focus on growth-oriented firms.

Why does the Denholm review argue for a "bold" overhaul of R&D funding?

The review warns that Australia faces a long-term decline in innovation investment which, if left unaddressed, could lead to a substantial reduction in future living standards. The report argues that the current system relies on incremental, "Band-Aid" solutions and risk aversion.

How would the proposed 100-point test affect Australian start-ups?

To qualify for favourable treatment, such as quarterly cash flow advances rather than annual refunds, start-ups would need to pass a 100-point style test. Criteria for this test include evidence of collaboration with universities or securing prior venture capital funding.

Which businesses might lose access to R&D tax refunds under these reforms?

Low-growth small and medium enterprises (SMEs) are the primary "losers" in this proposal, as the minimum spend to claim the incentive would jump from $20,000 to $150,000. This change is designed to ensure the scheme supports "growth-focused businesses only."

How could these reforms impact large ASX-listed companies like Atlassian (TEAM) or Fortescue?

The proposal to remove the $150 million cap on eligible R&D expenditure is a major tailwind for Australia’s largest innovators. Currently, companies like Atlassian, Fortescue, and Cochlear (COH) are significant users of the scheme; removing the cap would allow them to claim offsets on much larger portions of their research budgets.

What role do superannuation funds play in the "Ambitious Australia" roadmap?

The review identifies regulatory hurdles, specifically APRA’s performance tests and ASIC’s RG 97 guidelines, as barriers that currently discourage super funds from allocating capital to venture capital.

Does this news make Australian tech stocks more or less risky?

In the short term, the investment thesis for "low-growth" small-caps may weaken if they lose their R&D tax safety net. However, for high-growth sectors like quantum computing, med-tech, and ag-tech, the reforms could lower execution risk by improving cash flow and domestic funding options.

What are the main bull and bear points for the Australian innovation sector?

The bull case relies on increased capital flow from super funds, better cash flow for start-ups, and massive incentives for large-scale domestic R&D. The bear case is that the $150,000 entry floor may stifle very early-stage "garage" innovation and that the removal of ATO "clawback" powers could lead to administrative complexity.

Australia weighs major R&D tax incentive overhaul

Written by Heidi Cuthbert Published Mar. 16 2026Last Updated Mar. 16 2026

The Federal Government is considering a sweeping transformation of Australia's research and development landscape following the release of the "Ambitious Australia" report.

Led by Tesla chairwoman Robyn Denholm, the independent review warns that future living standards face a "substantial reduction" without bold, nation-changing reforms to reverse a long-term decline in innovation investment.

At the heart of the proposal is a strategic pivot of the Research and Development Tax Incentive to prioritise "high-potential" start-ups while tightening access for less ambitious small businesses.

Under the proposed model, eligible start-ups could access quarterly cash advances to bolster cash flow, provided they meet a 100-point criteria involving university collaboration or venture capital backing.

However, the review suggests raising the minimum expenditure threshold from $20,000 to $150,000, a move designed to focus the scheme on growth-oriented firms that may render some low-growth SMEs ineligible.

To further incentivise domestic scaling, the report recommends increasing the refundable offset turnover threshold to $50 million and removing the $150 million expenditure cap for major corporations.

Industry leaders, including the Business Council and the Tech Council of Australia, have welcomed the roadmap, noting it addresses critical barriers such as regulatory hurdles that currently discourage superannuation funds from backing venture capital.

Minister for Industry and Innovation Tim Ayres confirmed the government will now evaluate the 20 recommendations, which also include lifting PhD stipends to $50,000.

The reforms aim to ensure Australian innovators in sectors like quantum computing and med-tech can scale globally while remaining headquartered at home.