The First Draft Determination on Board powers to determine R&D eligibility has been released and it is good news for the R&D Tax Incentive

January 24, 2022 Ian Ross-Gowan

As part of the largest overhaul of the R&D Tax Incentive (RDTI) since its introduction in 2011, the Industry Innovation and Science Australia Board (the Board) was recently given the ability to provide improved advice on when activities are (or are not) eligible R&D activities. The 2020/21 Budget enabled the Board to provide Determinations on how its powers and responsibilities are performed as legislative instruments. This is a significant development in that it has the potential to provide much greater certainty on the eligibility of R&D activities than general guidance material.

The draft for public consultation of the first determination was released on 20 January 2022 and it is extremely positive. This draft Determination is to give certainty to most businesses doing clinical trials from Phase 0 to Phase III that their trials are core R&D activities.
It includes a positive test, being that it must involve therapeutic goods or medical devices that are exempt from use or importation restrictions because they are being solely used for clinical trials. These restrictions and allowable exemptions from these restrictions are as detailed in the Therapeutic Goods Act 1989, Therapeutic Goods Regulation 1990 or Therapeutic Goods (Medical Devices) Regulations 2002.

The clinical trial must involve therapeutic goods or medical devices that are exempt from requiring TGA approval to be used or imported because they are being solely used for clinical trials. These restrictions and allowable exemptions from these restrictions are as detailed in the Therapeutic Goods Act 1989, Therapeutic Goods Regulation 1990 or Therapeutic Goods (Medical Devices) Regulations 2002.

Certain clinical trials are excluded from this draft Determination, such as R&D on generic drugs or those that would involve an excluded core activity as defined in the RDTI legislation. However, the draft Determination and the explanatory materials make it clear that clinical trials that do not meet requirements in the draft Determination can still be eligible R&D activities under the normal application of the R&D tax incentive law.

Submissions are due by 17 February. If you are conducting or considering conducting clinical trials and wish to discuss the implications of this draft Determination and its application to your circumstances, please contact Ian Ross-Gowan on 02 9810 7211 or ian.ross-gowan@mjassociates.com.au.