Funding Your Innovation: A Guide to Australian Government Grants & R&D Tax Incentives

Securing provisional patent protection is a major milestone for any startup or enterprise, but funding ongoing development and market entry is where the real work begins. Navigating the landscape of Australian government incentives can be daunting, especially because programs evolve frequently. This is a guide to the primary federal and state funding streams for Australian innovators, current at 2 November 2026, including which programs are presently closed to new applications.

1. What is the Research and Development (R&D) Tax Incentive?

The R&D Tax Incentive (R&DTI) is the Australian Government's flagship innovation support mechanism. Unlike competitive grants, it is an entitlement program: if your company and its activities qualify, you receive the benefit regardless of competition from other applicants.

The benefit. An eligible incorporated company with aggregated annual turnover under $20 million (and not controlled by tax-exempt entities) can access a refundable tax offset equal to its company tax rate plus an 18.5% premium. For a base rate entity paying 25% tax, that is 43.5% of eligible R&D expenditure, paid as cash even if the company is making a loss.

Eligible costs. These include internal technical salaries and wages (with direct on-costs), prototype and trial materials, contractor expenses, apportioned rent and utilities for R&D facilities, and depreciation on equipment used in the experimental activities.

Important patent fee exclusion. Preliminary technical and prior art searches that directly inform your experimental development may qualify. However, patent attorney fees and official government charges for drafting, filing and prosecuting complete patent applications, in Australia or overseas, are generally capital in nature and are excluded from R&D claims.

Threshold. A company must generally incur at least $20,000 of eligible R&D expenditure in the income year to claim, unless the work is undertaken through a registered Research Service Provider (RSP), in which case the minimum does not apply. Applications must be made within ten months after the end of the income year.

Reform is coming. The 2026-27 Federal Budget (12 May 2026) announced a redesign of the R&DTI. The ATO says the measure is not yet law, and the changes are proposed to start from 1 July 2028; until then the current rules continue. As announced, supporting R&D activities would lose eligibility, the offset for core R&D would rise by 4.5 percentage points, the refundable offset would be limited to a company's first ten years of operation, the minimum annual spend would rise from $20,000 to $50,000, and the turnover limit for the refundable offset would rise from $20 million to $50 million.

Specialist guidance. If you need help structuring a claim, we frequently hear positive feedback from clients working with R&D tax specialist Damian Smyth at Swanson Reed (see Damian's profile). For program guidelines, visit business.gov.au.

2. What is the Industry Growth Program (IGP)?

The Industry Growth Program replaced the former Accelerating Commercialisation grant. It offers early-stage businesses commercialisation advisory services, followed by matched (50:50) grant funding for those who qualify. Early-stage commercialisation grants range from $50,000 to $250,000 for proof-of-concept and prototyping. Commercialisation and growth grants range from $100,000 to $5 million for scaling systems, entering markets and expanding manufacturing.

Priority alignment. Projects must generally fall within National Reconstruction Fund priority areas, including renewables and low emissions technologies, medical science, value-add resources, transport, defence capability and agriculture, forestry and fisheries. Minor improvements to existing products are not considered innovative.

Current status. At the time of writing, business.gov.au states that the program is paused to new applications. Details are at business.gov.au/grants-and-programs/industry-growth-program.

3. What are Export Market Development Grants (EMDG)?

Administered by Austrade, the EMDG program assists Australian small and medium businesses to promote and export goods, services and intellectual property overseas. Grants are allocated across tiers based on export readiness, from businesses ready to export for the first time to established exporters entering new key markets. Austrade currently reports that no grant round is open and will publish the timing of the next round on its EMDG page, which also sets out the eligibility criteria.

4. What were the AEA Ignite Grants?

Australia's Economic Accelerator (AEA) Ignite bridged the gap between proof-of-concept and commercial viability (Technology Readiness Levels 3 to 5) with competitive grants of up to $500,000 for up to 12 months. The grants were university-led: applications had to be submitted by an eligible Australian university or research institution in partnership with industry. The AEA website now states that no future rounds will be funded, so Ignite is no longer open to new projects. It remains a useful example of how government funding often depends on an industry partnership with a research institution, which makes it important to settle intellectual property ownership early.

5. What is the Future Made in Australia (FMA) Innovation Fund?

Administered by the Australian Renewable Energy Agency (ARENA), this fund provides up to $1.5 billion in grants for pre-commercial innovation, demonstration and deployment of renewable energy and low emission technologies. Priorities include green metals, renewable energy technology manufacturing and low-carbon liquid fuels. ARENA describes it as an ongoing, open program until funding is exhausted. Current priorities are on the ARENA website.

6. What do the State Governments offer?

State governments offer targeted commercialisation vouchers, innovation challenges, capital equipment grants and export assistance. In Queensland, see the Queensland Government Grants Finder. In New South Wales, see the NSW Grants and Funding Finder. In Victoria, see Business Victoria's Grants and Programs.

A practical point before you apply. Funders, advisers and university partners all require disclosure of your technology. Put a confidentiality agreement and, where appropriate, a provisional patent application in place first, and settle who owns the intellectual property before funds are spent.

Disclaimer: grant criteria, opening dates and tax legislation change frequently. This article is general guidance only and is not formal legal, accounting or tax advice. Consult a registered R&D tax adviser or grant consultant for a specific eligibility assessment.

Stellar IP Law helps innovators protect and commercialise their technology through patents, trade marks, designs and ownership and confidentiality agreements. We act for clients in Sydney, Gold Coast, Brisbane, Sunshine Coast, Newcastle and Wollongong. To discuss protecting your invention before you seek funding, please contact us.