R&D Tax Incentive determination published

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Australia’s first Research & Development Tax Incentive (RDTI) Determination has been approved, offering certainty and transparency when claiming clinical trials activities.

The RDTI is the most critical policy available to life sciences companies and the new Determination provides clarity on the types of clinical trials that will be accepted as core R&D activities. It offers certainty in eligibility and aims to reduce companies’ regulatory burden.

It is a welcome and positive step in cementing certainty to a programme that has been incentivising investment into the sector for over 10 years.

The clinical trial sector already contributes around $1.4 billion to the economy each year; it is a highly-regulated environment and industry has become familiar with eligibility over the past 10 years. This Determination acts as a formal indicator to the national and international life sciences ecosystem that clinical trials are a recognised and eligible core activity under the RDTI, and will enhance Australia as a globally-preferred location for clinical trials.

New guidance has been released to accompany the legislative tool, and notes that the Determination may also “be used by companies applying for advance or overseas findings if [they are] seeking certainty about whether their activities are core R&D activities or if conducting or planning to conduct activities overseas.”

“The Determination can only be used if all parts of the core R&D activity are occurring solely in Australia. If any part of the activity occurs overseas; e.g., if the evaluation or conclusions are sent to a parent company overseas, then the activity will not be deemed to be an Australian core activity.”

The guidance also offers suggested wording for applicants to indicate their intention to utilise the Determination.

Through the consultation process, the definitions of the Determination have been strengthened and extended, and the legislative tool is now suitable for development pathways of medicines as well as medical technologies (devices and diagnostics) and gives greater detail of the objectives included under each phase. This has been reflected in the Determination’s new name: Industry Research and Development (clinical trials, phase 0, I, II, III, pre-market pilot stage, pre-market pivotal stage, for an unapproved therapeutic good) Determination 2022.

This is the first determination released and has been done so under the RDTI reforms announced in the 2020-21 Budget. It was developed by the Department of Industry, Science, Energy and Resources and in consultation with the Australian Taxation Office and Department of Health.

AusBiotech’s response was developed together with the AusBiotech Clinical Trial Advisory Group, which provides guidance and advice on clinical trials policy, and AusBiotech members that are tax experts.

AusBiotech champions advocacy and its submission was quoted in the Determination’s launch, demonstrating that it is recognised as a persuasive, credible and collaborative voice of leadership for Australia’s life sciences industry. Read AusBiotech’s policy submissions here.

Read the Determination legislation here, and the Government’s guidance here.