Clinical trials and the R&D Tax Incentive – Greater certainty and a streamlined process

These determinations, slated in the FY20/21 budget, aim to provide more certainty to companies and investors and while the first determination addresses certain clinical trial related activities, other determinations are expected to follow. This determination defines phase 0-III clinical trials (as described in the draft determination) as ‘core’ R&D activities for the purposes of the RDTI. Companies undertaking these activities will be eligible to receive a tax offset of between 38.5% to 46.5% on related expenditure and the determination seeks to drive increased overseas investment into Australia for these activities.

In addition to providing greater clarity around the eligibility of clinical trial activities, the determination also aims to streamline the registration process, however details surrounding the new process are yet to be announced.

Not covered under this determination are phase IV trials, which are generally conducted to meet regulatory requirements, nor are trials concerning generic products. These activities may still meet the definition of a core R&D activity but their eligibility will continue to be assessed on a case-by-case basis.

Together with the Clinical Trials Activity initiative, which was introduced in 2019, this determination reinforces the government’s support of undertaking clinical trials within Australia. The initiative looks to invest $614.2 million over 10 years.

To ensure that this draft determination is robust and appropriately facilitates businesses undertaking clinical trials in Australia, it is open for feedback until Thursday 17 February. The determination documents can be found here.