What are the attractive tax incentives?

The R&D Tax Incentive provides a globally competitive incentive for both home-grown and foreign-owned companies to conduct R&D activities in Australia.

Global accounting firm KPMG placed Australia among the top ten most competitive locations for R&D investment.

The R&D Tax Incentive is specially designed to make access to tax benefits more efficient and more predictable. The Australian Government’s R&D Tax Incentive gives companies with an annual aggregated turnover of less than A$20 million a 43.5 per cent refundable tax credit, and companies with an annual aggregated turnover of more than A$20 million a 38.5 per cent non-refundable tax credit on eligible R&D expenditure.

Unlike similar programmes in other countries, there is no requirement for companies in Australia to demonstrate year-on-year growth in their R&D expenditure in order to claim a tax benefit. There is also no requirement for intellectual property from eligible R&D projects to be held in Australia. This recognises the inherent value of the research and development process itself, notwithstanding the eventual “location” of the resulting intellectual property ownership.

Which clinical trials are eligible for the R&D Tax Incentive?

A clinical trial must meet the definition of a ‘core’ or ‘supporting’ R&D activity under Australian law to be eligible for the R&D tax incentive. An eligible claim must have at least one ‘core’ R&D activity, which must be an experimental activity that meets certain criteria.

In general while there are some exclusions, activities conducted in early stage development or clinical trials (Phase 0/I, II and III) undertaken in Australia are likely to meet the criteria for eligibility. Phase IV clinical trials are not eligible as core R&D activities if they are being carried out to meet regulatory requirements. However, where they are being carried out as experiments for the purpose of resolving further scientific unknowns, and eligibility requirements are met, Phase IV clinical trials may be eligible.

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