The default position on overseas R&D under the Australian R&D Tax Incentive is straightforward: it isn't claimable. Section 355-205 of the ITAA 1997 limits eligible R&D expenditure to activities conducted on Australian soil, with a narrow set of exceptions.

For companies whose engineering, science or development teams sit partly or wholly offshore, this creates a structural problem that has to be addressed before any claim is built, not after. The mechanism for addressing it is the Advanced Finding.

What an Advanced Finding does

An Advanced Finding is a written determination by AusIndustry that specified overseas activities meet the requirements of section 28D of the IR&D Act 1986 and can therefore be treated as eligible R&D expenditure under the Australian scheme. The four-part test for approval is:

  1. The activity is a core or supporting R&D activity (the same eligibility test as Australian activities).
  2. The activity has a significant scientific link to one or more Australian core R&D activities.
  3. The activity cannot be conducted in Australia (because of geographical, population, geological or quarantine reasons — not commercial preference or cost).
  4. The total expenditure on overseas activities is less than the expenditure on the corresponding Australian core activities.

All four limbs must be satisfied. The "cannot be conducted in Australia" test is the one that disqualifies most applications. A company that could in principle hire the team in Australia, even at significantly higher cost, will fail this limb.

The timing window

This is where most companies miss the opportunity. An Advanced Finding has to be lodged with the Department of Industry, Science and Resources before the end of the income year in which the overseas expenditure is incurred.

That's not before lodgement of the registration. It's before 30 June (for standard balance dates). If the overseas work happened in FY26 and the Advanced Finding application isn't in by 30 June 2026, the expenditure is permanently excluded from the claim. There is no retrospective mechanism.

The implication: Advanced Finding strategy has to be a year-start conversation, not a year-end conversation. By the time most companies start preparing their R&D registration in September or October, the window for that year's overseas activity has closed.

What a defensible Advanced Finding looks like

Approval rates for Advanced Findings are well below 100%. The applications that succeed share a common structure:

  • A clear articulation of the Australian core activity. The overseas activity has to ride alongside an Australian core activity that is itself genuinely eligible R&D. If the Australian work doesn't qualify, the overseas piece doesn't either.
  • A specific, narrow definition of what's being done overseas. Broad applications covering "all overseas engineering work" tend to fail. Specific applications covering, for example, "field trials of cold-climate sensor performance conducted in Iceland between September 2026 and February 2027" tend to succeed.
  • Documented evidence that the work cannot be done in Australia. Geographical (the test environment doesn't exist here), population (the trial cohort doesn't exist here), geological (the substrate doesn't exist here) or quarantine (the material can't be imported). Cost, talent availability, time-to-market — none of these qualify.
  • A quantified expenditure forecast showing the overseas spend is less than the corresponding Australian core spend.

The application itself is structured around AusIndustry's own template. The supporting documentation is what determines the outcome.

Structuring a global engineering team's work

For companies with engineering teams split between Australia and overseas, the practical implications are operational, not just legal. The work has to be structured so the Australian team is genuinely conducting the core R&D activity (the hypothesis testing, the design decisions, the technical leadership), and the overseas team is conducting a supporting activity that meets the four-part test.

This often means:

  • Australian team holds the hypothesis ownership, experiment design, and conclusion drafting.
  • Overseas team executes specific, defined supporting work (data collection, prototype manufacture, environmental testing) under Australian direction.
  • Documentation flow runs from the Australian team outward, not the other way around.

A company where the technical leadership sits overseas and the Australian team is executing instructions usually fails the structural test, regardless of how the Advanced Finding is written.

The threshold question

For most companies, the threshold question on cross-border R&D is whether the overseas component is large enough to justify the operational discipline an Advanced Finding requires. If overseas spend is a small fraction of total R&D and the Australian work is plainly eligible, the simpler answer is often to claim only the Australian portion and accept that the overseas piece sits outside the scheme.

If the overseas component is material and the four-part test is genuinely satisfiable, the Advanced Finding is worth lodging — but the work to support it starts at the beginning of the income year, not at registration time.

The decision is structural. It deserves the structural attention.