The R&D Tax Incentive for mining, METS, and resources

Mining, METS (mining equipment, technology and services), and resources businesses make up a substantial part of Australia's innovation fabric. Whether you are designing autonomous haulage software, building more energy-efficient comminution circuits, or developing new geophysical survey methods, your technical work may be eligible for the federal Research and Development Tax Incentive (R&DTI). But the intersection of the resources sector and the program rules is where many claims stumble, particularly around exploration exclusions and the blurred line between operational improvement and genuine R&D.

This article is a step-by-step guide, not tax or legal advice. The rules are detailed, and the ATO and AusIndustry scrutinise resource claims closely. Always confirm your position with a registered tax agent or accountant who is familiar with the R&DTI and the mining and resources sector.

Prerequisites: what you must have in place before you start

Before you dive into eligibility and project scoping, you need a few operational items ready. First, your business must hold an active Australian Business Number (ABN) and be carrying on business in Australia. The R&DTI applies to corporate tax entities, so if you operate as a trust or partnership, you may need to restructure or work through a corporate vehicle. Second, you need aggregated turnover figures; the current turnover threshold for the refundable tax offset is $20 million, although the government has proposed lifting it to $50 million for income years starting on or after 1 July 2025 (check the latest ATO and Treasury guidance, because the law had not passed at time of writing).

Third, have your accounting records in order, because the claim is built on the expenditure your business actually incurred. Cloud accounting platforms like Xero, MYOB, and QuickBooks are the practical source of truth. GrantsMAX connects to those accounts to pull the numbers and start drafting a claim, but whatever tool you use, the data must be clean and project-coded.

Fourth, understand that the R&DTI is a self-assessment program with AusIndustry registration as a gate. You cannot lodge a claim without a valid AusIndustry registration number for each income year. This is not a grant; it is a tax offset claimed through your company tax return.

Fifth, a registered tax agent or accountant must review and lodge the claim, or at a minimum sign off on the R&D schedule that accompanies your tax return. You own the claim, but the agent is accountable to the Tax Practitioners Board. GrantsMAX prepares an evidence-backed application pack from your data, but the accountant reviews, refines, and lodges.

Pro tip: Run a quick pre-assessment before you commit time to full documentation. The Eligibility Assessment & Risk Flags feature in GrantsMAX uses your accounting data to flag the areas a reviewer would scrutinise, giving you a clear read on what you may be eligible for and where to firm up evidence, before your accountant gets involved.

Step 1: Understand whether your work is eligible R&D

Eligibility under the R&DTI rests on the definitions in the Income Tax Assessment Act 1997. To be eligible, your activities must be systematic, investigative, and experimental activities carried on for the purpose of generating new knowledge. The outcome must be unknown or uncertain and cannot be determined in advance by a competent professional in the field. The activity must be conducted in Australia (some overseas activities may qualify under specific conditions, but the default is domestic).

For mining, METS, and resources businesses, this is where you need to be clear about what counts as a core R&D activity and what is excluded. The Australian Taxation Office and AusIndustry provide detailed guidance; the business.gov.au eligibility checker is a practical starting point.

Many organisations in this sector assume that all technical work on site qualifies, but the program is narrower. If you are drilling for ore body definition using standard industry techniques, that is unlikely to meet the threshold of experimental activity whose outcome cannot be known in advance. However, if you are developing a new sensor fusion algorithm to improve downhole ore grade discrimination in real time, and you cannot determine whether it will work without conducting experiments, you may have a core R&D activity.

The key test is whether you are solving a technical problem through a hypothesis-driven experimental process. Resource companies often pivot from extractive operations to process innovation in renewable energy materials or critical minerals processing, and that shift opens R&D opportunities. As noted by KPMG in a global review of R&D incentives for resources and critical minerals, jurisdictions are increasingly encouraging R&D that supports energy transition materials, and Australia's program is no exception.

Step 2: Separate core R&D activities from supporting activities

Once you identify a core R&D activity, you can also claim certain supporting activities that are directly related to that core activity. This distinction matters because supporting activities cannot be claimed in isolation; they must serve a core R&D activity. For a METS company testing a new flotation cell design, the core activity might be the iterative lab-scale testing under varying chemical and flow conditions. Supporting activities could include collecting field samples, running simulations to model fluid dynamics, or fabricating a prototype test rig.

A common trap in the resources sector is claiming the entire cost of a pilot plant as supporting R&D when only a fraction of the plant's operation was genuinely experimental. The ATO expects you to apportion costs between eligible and ineligible use. If a pilot plant produced saleable product for two months and ran experiments for two weeks, only the costs attributable to the experimental period plus any direct setup directly tied to the experiment may be eligible.

For technology-driven METS companies, the line can be easier to draw. A software team building a machine learning model to predict conveyor belt failure may have core activities in the model development, and supporting activities in the data labelling and historical sensor data cleaning. The AI Application Pack Drafting engine in GrantsMAX separates these two categories automatically so the accountant can see the breakdown.

Step 3: Navigate mining and METS exclusions and pitfalls

The law expressly excludes certain activities from being core R&D activities even if they otherwise meet the definition. For mining and resources, the most important exclusion covers exploration activities carried out to locate, appraise, or define the extent or quality of a deposit. This includes drilling, trenching, sampling, and geophysical surveys that are standard practice for ore body delineation. However, if you are developing a brand new exploration technique (for example, a novel airborne electromagnetic method that has not been validated), the development of that technique may be core R&D, while the use of it to find a specific deposit would not be.

Another exclusion covers activities related to the extraction, production, or recovery of minerals, petroleum, or quarry materials. Routine process optimisation, mine planning, and grade control are generally outside the scope. But if you are creating a new hydrometallurgical extraction process for nickel laterites and are experimenting with leaching parameters at bench scale to overcome a known technical barrier, that may be eligible.

Warning: Never assume that work on improving recovery rates, reducing dilution, or lowering energy consumption is automatically R&D. You must be able to articulate the specific technical hypothesis, the experiment, and the uncertainty that could not be resolved by an expert in the field without actually doing the work.

METS businesses often sit in a sweeter spot because they are not the actual mineral extractors. A METS company designing a new in-pit crushing and conveying system is likely solving a technical problem whose solution is not obvious, and therefore may be eligible if the work meets the systematic experimentation test. Even so, you must track the R&D spend separately from the commercial engineering you deliver to a mine.

Step 4: Register with AusIndustry within the deadline

Registration is mandatory and must be done on an annual basis. You apply for an AusIndustry R&D Tax Incentive registration for each income year, and the registration must be lodged within 10 months after the end of your income year. For a 30 June balance date, that deadline is generally 30 April of the following year. Late registration is not accepted, and no discretion applies. If you miss it, the claim is lost for that year.

The registration form asks you to describe the core and supporting activities, their objectives, and the technical hypothesis. You do not need to lodge the full R&D schedule at this point, but you must provide a truthful and complete description. AusIndustry may later ask for details, and a sloppy registration can invite a review. GrantsMAX prepares the activity description from your data and feeds it into a format your accountant can use for the registration, ensuring consistency between what you tell AusIndustry and what appears in your tax schedule later. The Accountant Review & Lodge Workflow keeps everything in one place.

Step 5: Build a contemporaneous evidence trail

Contemporaneous records are the backbone of a defensible R&D claim. The ATO can review claims for up to four years (sometimes longer), and they will ask for evidence that the activities occurred as described, and that the expenditure was incurred. For mining and METS businesses, this often means board documents approving an R&D project, design of experiment documents, lab notebooks, test logs, safety permits, shift reports, and project cost codes.

A practical way to generate contemporaneous evidence is to hold a short project kick-off meeting that records the technical hypothesis, the uncertainties, and the intended experiments. Date it and file it. Then, as you run experiments, log results, observations, and failures. Even a failed experiment is eligible R&D if it was properly designed, so do not hide it; failure often provides the best proof that the outcome was genuinely uncertain.

GrantsMAX is not a record-keeping system, but it reads your general ledger and can pull cost data from Xero accounts that you code to R&D projects. Your accountant will still want to see the supporting documentation behind those numbers. The pack GrantsMAX builds includes a supporting-evidence index that lists the types of records you should retain and links to where they can be found, which helps your accountant meet the substantiation expectations.

Step 6: Calculate eligible expenditure and the offset

Eligible R&D expenditure typically includes direct labour, materials consumed or transformed during the experiments, contract expenditure for R&D services performed by an approved research institute, and overheads allocated on a reasonable basis. Interest, core technology costs, and expenditure on excluded activities are not eligible.

For mining and METS businesses, labour is often the largest component. You must be able to attribute the hours of engineers, scientists, and technicians to specific R&D activities. Timesheets are the gold standard, but reasonable estimates based on project diaries and work schedules can be acceptable if they are contemporaneous and credible.

The current rates, according to the ATO, are a refundable tax offset of 43.5% of eligible R&D expenditure for companies with aggregated turnover below $20 million, and a non-refundable offset of 38.5% for larger entities (rates for the 2023-24 income year; always verify the rate for your current year because they are indexed or may be legislatively changed). The proposed increase of the refundable offset turnover threshold to $50 million would expand the number of resource companies eligible for the cash refund, but it is not yet law.

If your business generates a tax loss, the refundable offset can be paid as a cash refund, which is often the most valuable outcome for early-stage explorers and METS startups that are pre-revenue. For those businesses, the GrantsMAX for R&D-active startups page outlines how the system fits together, from data connection to accountant-lodged claim.

Pro tip: Do not inflate costs. The ATO has sophisticated analytics and can compare your claimed labour rates and material usage against industry benchmarks. A conservative, well-documented claim is far more likely to stand up than an aggressive one.

Step 7: Prepare the R&D tax incentive schedule and have an accountant review and lodge

The R&D tax incentive schedule is lodged as part of your company tax return. It includes a detailed breakdown of the activities, the expenditure, and the registration number. The schedule must align with what you registered with AusIndustry. Discrepancies can trigger a compliance review.

This is where many resource businesses stumble because the technical language needs to be translated into the ATO's framework. A registered tax agent who understands the R&DTI and your sector is invaluable. They can flag risks, ensure the schedule is internally consistent, and manage the ATO relationship if a review occurs.

GrantsMAX's role here is to assemble the pack: the activity narratives, cost calculations pulled directly from your accounting data, and a list of evidence items. Then, through the Accountant Review & Lodge Workflow, your accountant receives the pack in a shared workspace, can adjust anything, and lodges. The business owns the claim at all times. This model is especially attractive for accounting firms that serve multiple mining services clients because the Annual Refresh & Accountant Channel feature lets them white-label the entire data-to-pack pipeline.

Step 8: Know what happens after lodgement and how to stay compliant

After lodgement, the ATO processes the claim and may issue a refund or apply the offset against your tax liability. Some claims are selected for review; AusIndustry and the ATO share information, and they can request records, conduct site visits, or ask your agent to explain technical aspects.

If you are a first-time claimant, expect extra scrutiny, but that is not a bad outcome if your documentation is solid. The GrantsMAX for first-time claimants resource explains how a well-prepared pack, reviewed by your accountant, puts you in a strong position from the start.

Staying compliant year on year means treating the R&DTI as an annual process. Projects evolve, and what was experimental last year may be standard practice this year. Each claim must stand on its own, supported by contemporaneous records for that specific income year. If you use GrantsMAX, the engine refreshes each claim annually from your latest data, so you do not miss a year.

Finally, never lose sight of the fact that the R&DTI is a tax law provision, not a grant program. The ATO is the administrator, and the penalties for overclaiming can be significant. This is not a reason to avoid claiming, but it is a reason to do it properly, with a qualified tax agent.

Key Takeaways

The R&D Tax Incentive can be a powerful funding source for mining, METS, and resources businesses undertaking genuine technical innovation. The program rewards careful documentation, honest scoping, and a methodical approach. Always:

• Separate core from supporting activities and exclude exploration-type activities that are not developmental.
• Register with AusIndustry on time and align your registration with your tax schedule.
• Build contemporaneous evidence from day one; board minutes, test logs, and project codes.
• Calculate expenditure conservatively and attribute labour accurately.
• Have a registered accountant review and lodge, because compliance is not optional.

If you want a system that reads your accounting data, drafts the activity narratives and cost structure, and hands your accountant a complete pack to review and lodge, visit GrantsMAX and join the waitlist. We built it for businesses like yours, so you can focus on the innovation, not the paperwork.