AusIndustry recently issued a determination allowing certain clinical trials to be accepted as eligible core Research and Development (R&D) activities, in turn providing greater certainty for applicants of the R&D Tax Incentive.
The determination came into effect 1 April 2022 and details the types of clinical trials that benefit from this determination.
Which clinical trials will qualify?
Clinical trials that are now accepted as eligible core R&D activities include those that:
- Relate to the development of an ‘unapproved therapeutic good’; and
- Are phase 0, phase I, phase II, phase III, pre-market pilot stage and pre-market pivotal state clinical trials (but not phase IV or post-market stage clinical trials).
Unapproved therapeutic goods are generally relevant to the medtech and biotech industries and include items like medical devices, medicines and other goods used for therapeutics purposes such as blood products.
What do you need to know?
Businesses conducting R&D activities should be aware that this determination still requires applicants to maintain contemporaneous documentation (such as employee timesheets or agreements with Contract Research Organisations) evidencing the amount of eligible R&D expenditure incurred during the income year. These are the documents the ATO will likely request in a review or audit and without these documents in place, the claimant’s expenditure may be denied.
Further, clinical trials that do not satisfy the conditions of this determination may still be eligible core R&D activities. In those instances, applicants must demonstrate that these activities meet the definition of a core R&D activity, without the support of this determination.
This determination is welcome news for R&D applicants and we hope to see further determinations or measures that fast-track the R&D claims process.
To find out whether you qualify for this determination or would like to know more about how we can manage your R&D claim process, please contact your local William Buck R&D Tax Specialist.