How agribusinesses can benefit from the R&D Tax Incentive

The RDTI is one of the most valuable support programs available to Australian agribusinesses providing refundable tax offsets of up to 43.5% on eligible R&D expenditure, enabling ag tech companies, to significantly reduce the cost of innovation. Many agribusinesses conduct R&D without realising their activities qualify under the program.

What Qualifies as R&D in Agribusiness?

The key eligibility requirement is that activities must involve experimental development conducted to generate new knowledge. This generally means testing solutions to technical problems where the outcome is uncertain.

Eligible Agribusiness R&D may include:

• Controlled field trials of new crop varieties, soil blends or fertilisers
• Experimenting with livestock genetics, feeds or health treatments
• Developing or trialling ag tech (e.g., sensors, automation, decision support tools, developing algorithms or integrated systems that address agribusiness specific technical challenges)
• Integrating ICT or biotechnology solutions into agrifood systems where the interaction between components is not well understood and requires experimentation.
• Experimenting with sustainable or regenerative farming techniques
• Product and ingredient development to achieve improved nutritional profiles, shelf life or functional properties
• Developing new processing techniques (e.g. harvesting, fermentation, drying, extraction or preservation methods) where existing methods cannot deliver the required outcome
• Agricultural production trials including conducting controlled experimental trials to test whether new agronomic approaches, inputs or biological treatments can achieve outcomes that are not achievable using established practices.

It is important for companies to distinguish their routine farming activities with the R&D activity. Designing experimental trials with a systematic experimental process where activities are planned to solve a technical uncertainty or generate new knowledge is essential —for example, controlled field trials or prototype testing.

Robust record keeping is crucial. Clear documentation is critical for demonstrating eligibility and withstanding ATO or Industry review. Agribusinesses must document:

• the hypothesis with a clear description of the technical problem and uncertainty technical
• the experimental plans and method
• records of trials, data collected
• trial results and analysis
• conclusions showing what new knowledge was generated
• distinctions between R&D and ordinary farming

Common pitfalls for agriculture businesses claiming R&D

Agribusinesses often run into issues when they classify routine farming as R&D or claiming whole of farm operational activities.

Another key pitfall is failure to document experiments and incorrectly identifying ineligible activities as core R&D. Eligible R&D must be undertaken for the purpose of creating new technical knowledge. Activities that focus only on improving yield, quality, sustainability or efficiency using known methods with known outcomes are unlikely to qualify, even if they involve commercial risk or significant investment.

Maximising the benefit

To optimise claims, agribusinesses should:

• plan experiments with defined hypotheses
• track R&D costs separately from operational costs
• identify both “core” (experimental) and “supporting” activities
• ensure activities align with the R&D definition before claiming

Key takeaway

The R&D Tax Incentive can provide significant support for agribusiness innovation. With a structured approach, agribusinesses can capture significant financial benefits from the RDTI while maintaining compliance. Businesses that establish these practices early are far better positioned to withstand ATO or Industry reviews and audits. Talk to us today about your agribusiness R&D and how you can optimise the benefits of the program.