R&D Tax Incentive – Clinical Trials Determination

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R&D Tax Incentive: Clinical Trials Determination and What It Means for Your Business

The R&D tax incentive can be an essential source of support for companies in the medical research and development sector. If you’re involved in clinical trials, particularly in Australia, understanding the “Clinical Trials Determination” is key to ensuring your projects qualify for this tax benefit. Clinical trials require significant investment, and a well-informed R&D tax claim can help offset these costs and fuel further research, but navigating the requirements can be complex. That’s where we at Bulletpoint come in—to guide you through every step, making sure you’re maximising your claim.

What is the Clinical Trials Determination?

The Clinical Trials Determination is a guideline specifically for assessing if your clinical trials qualify as core R&D activities. Essentially, it clarifies the eligibility criteria, focusing on scientific advancement, compliance with Australian regulations, and the unapproved status of therapeutic goods under trial. Since this Determination was introduced, companies like yours have gained greater assurance that their investments in early-phase clinical research will be supported under the R&D tax incentive.

Why the Clinical Trials Determination Matters to You

If you’re running clinical trials, especially in the early phases, you may be eligible for the R&D tax incentive. By understanding whether your clinical research qualifies as core R&D activities, you can secure essential financial support that allows you to focus on further scientific advancements.

The importance of qualifying under this Determination includes:

• Maximising your claim – Ensure that your clinical research qualifies, optimising the value you receive from the R&D tax incentive.
• Supporting growth – With financial support secured, you’re better positioned to drive continued innovation, supporting your business’s growth.
• Fueling research – This incentive allows you to redirect resources toward essential research efforts, helping you make a greater impact in the industry.

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Background of the Clinical Trials Determination

On 20 January 2022, the Federal Government launched the Industry Research and Development (Clinical Trials, Phase 0, I, II, III) Determination. This Determination aims to bring clarity, giving businesses in the clinical research sector greater certainty about their eligibility for the R&D tax incentive. Specifically, the guideline outlines that eligible trials for unapproved therapeutic goods, when conducted for experimental purposes, qualify as core R&D activities under Australian law.

At Bulletpoint, we know that clinical trials are critical to advancing treatments in medicine, medical devices, vaccines, and diagnostic therapies. Not only do these trials bring innovation but they also strengthen Australia’s research sector, bringing new treatments to patients while positioning Australian institutions at the forefront of global health advancements.

Why the Government Supports Clinical Trials Through the R&D Tax Incentive

The Australian Government recognises the value of clinical trials to the economy, the workforce, and patient health. According to MTP Connect’s 2021 Clinical Trials Report:

• Employment – The sector supports around 8,000 Australian jobs.
• Participant involvement – In 2019 alone, over 95,000 Australians participated in clinical trials, with around 1,880 trials initiated.
• Economic impact – The industry accounted for $1.4 billion in spending on clinical trials in Australia in 2019.
• Export revenue – Clinical trials now generate more export revenue than sectors like construction, intellectual property, and government services.

By supporting the clinical trial sector through incentives, the government strengthens this valuable industry, further encouraging companies to conduct all phases of clinical trials here in Australia.

Understanding the Eligible Phases for the Clinical Trials Determination

Only certain phases of clinical trials are considered core R&D activities under this Determination, and these must involve unapproved therapeutic goods solely for experimental purposes in humans. The eligible stages include:

• Phase 0 – Exploratory studies, testing how the body responds to an unapproved therapeutic good before entering Phase I.
• Phase I – The first administration of an unapproved therapeutic good to humans, focused on understanding safety, functionality, and tolerance.
• Phase II – Trials with patients who have the condition the therapeutic good is intended to treat, determining safety and effectiveness.
• Phase III – Larger trials confirming clinical benefits and assessing side effects, building on Phase I and II findings.

Each of these phases must meet strict regulatory guidelines, including approval or notification by the Therapeutic Goods Administration (TGA) to qualify.

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What is Excluded?

While Phases 0 to III are covered under this Determination, there are specific exclusions. Activities that do not qualify as core R&D activities include:

• Clinical trials of generic products – Generic drug trials are excluded.
• Phase IV clinical trials – Post-approval trials are not considered core R&D activities.
• Marketing activities – Market research, testing, and promotional activities are also excluded.
• Non-compliant activities – Activities not conducted under proper regulatory compliance or approvals are excluded.

If your activities fall outside these guidelines, they may still qualify under other sections of the 1997 Act, but further evidence may be required to establish eligibility.