Where we work · Australia
Nobody awards Australia’s main instrument. You claim it, and you carry the risk.
There is no competitive grant at the centre of the Australian picture. There is one entitlement, self-assessed, claimed after the year ends, refundable in cash for smaller companies, and published by law. That changes what preparation means. We work with Australian founders remotely from Hyderabad, in English. We have no office and no entity in Australia, and we say so plainly.
A formula, two thresholds and a deadline.
Rate plus 18.5
The refundable offset is the company’s own tax rate plus an 18.5 point premium. For a company on the 25% base rate that comes to 43.5%; on 30% it comes to 48.5%. The tax office states the formula, not a number. ATO, offset rates, 13 May 2026
Under AUD 20m
Aggregated turnover for the offset to be refundable, and the company must not be controlled by income tax exempt entities. At or above it, the offset is non-refundable at the tax rate plus 8.5 or 16.5 points. ATO, offset rates, 13 May 2026
AUD 20,000
Minimum eligible research and development spend in the income year. The threshold does not apply if a registered research service provider did the work. business.gov.au, R&DTI eligibility
10 months
After the end of the income year to register the activities. For a 30 June year end that is 30 April, which is late enough to miss without ever being late for anything else. business.gov.au, R&DTI overview
Two regulators
The industry department registers the activities; the tax office processes the claim. Two decisions, one programme, and they are about different things. business.gov.au, R&DTI overview
1 July 2028
When the changes announced in the 2026–27 Budget start. Until then the programme runs on the rules above, whatever a commentary written in May said. business.gov.au, R&DTI
Nothing here is awarded and nothing is competitive. The company decides whether it qualifies, claims, and finds out whether it was right later — which puts the whole of the risk in how the work was planned and recorded, not in how the claim was written.
Self-assessment, and the clause that catches software.
Eligibility is defined in section 355 of the Income Tax Assessment Act 1997 and the programme is self-assessed. The department’s own words: you are responsible for ensuring you and your activities are eligible before applying.
- A core activity is an experiment, not a project. The outcome must be one that cannot be known or determined in advance and can only be determined by a systematic progression of work — hypothesis, experiment, observation, evaluation, logical conclusions. A plan that reads as a build schedule is not describing a core activity. business.gov.au, R&DTI eligibility
- Supporting activities that ship product need a dominant purpose. An activity directly related to a core activity qualifies — unless it produces goods or services, or is itself an excluded core activity, in which case it must be conducted for the dominant purpose of supporting the core activity. This is where a software company’s claim is won or lost. business.gov.au, R&DTI eligibility
- Certainty is available, and it is binding. The department can be asked for an advance finding, which is a legally binding decision on whether the activities are eligible. It is the one way to take the eligibility risk off the company before it spends. business.gov.au, R&DTI eligibility
- Overseas work needs its finding first. Activities conducted overseas can be claimed, but only with a positive overseas finding already in place before the claim. Afterwards is too late, and this is the condition most often discovered in the wrong order. business.gov.au, R&DTI eligibility
- The claim is not private. The tax office is required by law to publish certain details of entities that claim the offset. We have not established which fields or with what lag, and say so rather than guess — but a company planning a claim should know that it will be a matter of record. business.gov.au, R&DTI overview
So preparation is not paperwork. It is deciding, before the work starts, which parts of the year are experiments and which are product, and keeping records that would persuade someone who was not there. We are not tax advisers and we do not prepare claims; this is the operating decision underneath one.
A relief for your investors, and a filing for you.
The early stage innovation company rules give investors an offset and modified capital gains treatment. The conditions land on how the round is built, and the company carries a filing with real penalties attached.
- Thirty per cent is a hard line. An investor who, immediately after the shares are issued, holds rights to more than 30% of distributions or voting power in the company or entities connected with it gets nothing. Nor does an affiliate of the company, nor anyone holding shares acquired through an employee share scheme. ATO, qualifying for the incentives, 9 Sep 2024
- An investor who is not sophisticated has a ceiling. Where total investment in early stage innovation companies exceeds AUD 50,000 in the income year and the sophisticated-investor test was not met for at least one of those offerings, both the offset and the capital gains treatment are lost for that year. ATO, qualifying for the incentives, 9 Sep 2024
- The shares have to be new and bought from the company. Secondary purchases do not qualify, and nor do interests that are not equity. Where the shares come from converting a note, the conversion date is the date that matters. ATO, qualifying for the incentives, 9 Sep 2024
- The company files by 31 July, under declaration. A company that issued shares which could entitle an investor must lodge a report, generally 31 days into the following financial year, declaring that it met the requirements for every reported investment and stating which innovation test it applied. The tax office notes that filing it knowing the company does not qualify can carry penalties including criminal ones. ATO, for early stage innovation companies, 4 Aug 2026
- A ruling is available, and it is not an endorsement. A company may seek a ruling on the principles-based test. The tax office states that the ruling should not be used in promotional material to imply it guarantees or endorses investment, and that promoter penalty laws may apply if it is used to encourage investors once circumstances have materially changed. ATO, for early stage innovation companies, 4 Aug 2026
That last point is also our own position, and we are glad the regulator says it first. Nothing about a tax status tells anyone whether a company is worth backing, and nothing we produce will be written as though it does.
Where Australian seed companies get stuck.
| Problem | What it looks like | What we work on |
|---|---|---|
| The experiment is reconstructed afterwards | A year of product work is written up as research in April, ten months after it happened. The dominant-purpose test on supporting activities is then being argued from documents that were never written for it. | Deciding at the start of the year which work is experimental and why, and setting up records that answer the statutory test rather than describing the sprint. |
| A deadline nobody is late for | Ten months after year end feels like plenty, so registration moves to the back of the queue behind things with earlier dates, and the quarter it was due in passes. | Putting the registration date in the operating calendar with the work that has to precede it, so the deadline is a consequence of a plan rather than a surprise. |
| A round that quietly disqualifies an investor | An angel ends up over 30% of voting power, or takes shares through an employee scheme, or an unsophisticated investor goes past the annual ceiling. The relief they priced the round on is gone and nobody notices until July. | Reading the investor conditions as constraints on the cap table while the round is being built, and telling investors plainly what the company can and cannot support. |
| Planning on rules that start in 2028 | The Budget announcement is read as current. It is not: the department states the changes start on 1 July 2028, and a plan built on them is built on nothing for two more years. | Separating what is in force from what is announced, on the record, so the plan can be revisited when the announced rules actually arrive. |
Hours, invoices and what we are not.
- Hours
- Eastern Australia is four and a half hours ahead of India in winter and five and a half during daylight saving. A Sydney afternoon is a Hyderabad morning, so the overlap is real but it sits at one end of the day and we schedule for it rather than around it.
- Language
- English.
- Tax
- We are not tax advisers and we prepare no claims. Everything on this page is a condition with its source attached, and your accountant and your registered tax agent advise on it.
- The company tax rate
- The offset is the company’s own rate plus a premium, so the rate matters. The base rate has its own turnover and passive-income conditions, which we have not read at source — so the figure above leads with the formula and shows what it comes to at each rate, rather than quoting one percentage as though it were everyone’s. ATO, offset rates, 13 May 2026
- Goods and services tax
- Services bought from outside Australia may fall within the reverse-charge rules depending on the company’s registration and use. We state no figure; your accountant confirms it.
- Data
- The Privacy Act applies. We act as a data processor under a written agreement, and we will tell you where founders’ work in Founder OS is stored before you put anything in it.
- Invoices
- In AUD or USD, from our Indian company.
Offsets, filings and the things we do not do.
Can you tell us whether our work qualifies for the offset?
No, and the programme is built so that nobody can tell you cheaply. It is self-assessed against a statutory test, and if you want certainty the department issues a legally binding advance finding. What we work on is the decision underneath: which work is experimental, and whether the records would convince someone who was not there.
Will you prepare our registration or our claim?
No. We are not a research and development claim firm and we are not tax agents. We work on the planning and the records that a claim later rests on, which is a different job and is done earlier.
Should we get a ruling on our early stage innovation company status?
That depends on what the round needs and what the company can stand behind. We will work through it with you. What we will not do is treat the answer as something to show investors — the tax office says plainly that a ruling is not an endorsement, and we agree.
Do you have an office in Australia?
No. We work with Australian founders remotely from Hyderabad, in English, and there is no local entity. We would rather say that than imply a presence we do not have.
What on this page could not be verified?
Three things. Which fields the tax office publishes about claimants, and with what lag. The parameters of the announced 2028 changes, beyond their start date. And the point allocations behind the two innovation tests, which we name without quantifying.
Figures on this page were last checked on .
Start at the beginning of the year, not the end of it.
A 45-minute call with Dineshwara, scheduled in Sydney or Melbourne time.