Overseas R&D Expenditure: 30 June Deadline

If your business conducts research and development activities outside Australia, the clock is ticking. An Advanced Overseas Finding (AOF) application must be lodged for overseas R&D activities during the income year they were conducted. You cannot claim expenditure on overseas activities without having a positive AOF.

At Vincents, our R&D specialists help simplify the Research and Development Tax Incentive (RDTI) process for businesses across Brisbane, Sydney, Melbourne, Canberra, Adelaide, Gold Coast, and the Sunshine Coast, making it easy to meet and manage your obligations.

Why the 30 June Deadline is Important

The AOF lodgement deadline is strict, and no late applications or extensions of time are permitted under any circumstances.

Expenditure on overseas R&D activities cannot be claimed under the RDTI unless your company first obtains a positive AOF from the Department of Industry, Science and Resources (DISR). The AOF application must be submitted before the end of the income year of which the activities were conducted.

For the income year ending 30 June 2026, that means your application must reach DISR before 30 June 2026.

If you are considering an AOF, we recommend beginning the preparation process early to ensure you meet the 30 June deadline.

Not sure if you qualify? Speak with our R&D advisory team for assistance with accessing your eligibility and structuring your research and development activities to take full advantage of the incentive.

What Is an Advanced Overseas Finding?

The AOF is a formal approval mechanism that allows companies to include overseas R&D activities within an RDTI claim. Without a positive finding, any expenditure on overseas R&D activities is ineligible, regardless of its legitimacy or connection to Australian R&D.

A positive AOF is binding for three years, covering both the approved Australian and overseas R&D activities. After that period, overseas activities and related expenditure may remain eligible, provided neither the Australian nor the overseas activities have materially changed.

When Are Overseas R&D Activities Eligible?

Overseas R&D activity must satisfy all four conditions below. Miss one, and the activity does not qualify.

1. The Activity Must Be an Eligible R&D Activity

The overseas work must meet the same standard as domestic R&D, genuine experimental activity conducted to resolve technical uncertainty and generate new knowledge.

2. The Activity Must Link to an Australian Core R&D Activity

The overseas component must connect directly to a core R&D activity conducted in Australia. It cannot stand alone. Your Australian core activity must be unable to proceed without the overseas component.

3. The Activity Cannot Be Conducted in Australia

You must demonstrate a clear reason why the work cannot happen in Australia. DISR accepts the following:

• A lack of appropriate facilities, expertise, or equipment in Australia
• Quarantine or biosecurity laws preventing domestic conduct
• A relevant population of living things, human or animal, not available in Australia
• Geographical or geological features that do not exist in Australia

Cost alone is not a valid reason. If the only barrier is that overseas work is cheaper, the activity does not qualify.

4. Overseas Expenditure Must Be Less Than Australian Expenditure

Your overseas R&D spend must remain below the expenditure on related core and supporting R&D activities conducted solely in Australia across the R&D project.

Which Overseas Activities Are Likely to Qualify?

These are the most common scenarios we see succeed under the AOF framework:

• Clinical trials – where the required population of people or animals is not available in Australia. For example, a trial targeting a condition with low prevalence in the Australian population.
• Pre-eminent overseas experts – where your Australian core R&D activity genuinely cannot proceed without the involvement of a world-leading specialist unavailable in Australia.
• Overseas-based team members – where employees with the specific skills required cannot be recruited in Australia, with clear evidence the local market has been tested.
• Prototype manufacturing – where the required facilities or equipment do not exist in Australia and are essential to the R&D process.

Each scenario demands thorough documentation. A successful AOF application demonstrates not just what you did, but why it could not be done domestically.

Is the AOF Process Worth the Effort?

A positive AOF can deliver a significant tax offset, but the process is demanding.

Preparing a compliant AOF submission is time-intensive. Companies frequently underestimate the internal resources required. DISR routinely issues multiple rounds of detailed written questions, and incomplete applications risk an adverse finding.

Before committing, a cost-benefit assessment is essential:

• Estimate the RDTI offset your overseas expenditure would generate
• Assess the internal time required to gather documentation and respond to DISR queries
• Factor in professional fees for preparing a compliant, persuasive submission
• Consider the risk of an adverse finding if the application is not properly constructed

 An AOF can deliver significant value, but only if the potential return justifies the undertaking. We provide transparent advice from the outset; if the business case isn’t there, we will tell you directly. Our R&D advisory team has deep experience with RDTI applications and AOF submissions, and we can conduct a thorough cost-benefit analysis to determine whether the investment is truly worth pursuing. From there, we will help assess your eligibility, build the strongest possible case, and manage the DISR process alongside you so nothing is missed.

Act Before 30 June

If your business conducts overseas R&D activities and you haven’t yet explored whether they qualify, now is the time to move. Contact the Vincents R&D Advisory Team to discuss your eligibility and evaluate whether pursuing an AOF is a strategic move for your business.