Streamlining R&D Tax Claims for Clinical Trials in Australia
Clinical trials have long been viewed favourably under the R&D Tax Incentive Program. Recent biotech sector analysis indicates the R&DTI generated a return of $3.14 for each forgone tax dollar in 2021, an increase of 138% from $1.32 in 2013. It’s also estimated that, for the biotech sector alone, the program has increased Australian GDP by approximately $9.1 billion since inception.
To more formally recognise this, the Australian Government put in place a landmark determination aimed at facilitating easier registration of clinical trials with AusIndustry under the R&D Tax Incentive Program. The process significantly reduces administrative burden for companies and streamlines the process of obtaining an R&D Tax Offset.
Clinical Trials Determination
Clinical trials, characterised by meticulous planning, monitoring, and regulatory oversight from the Therapeutic Goods Administration (TGA), play a crucial role in advancing medical research and treatments. The determination acknowledges the complexity and significance of clinical trials, categorising relevant activities as 'core R&D activities' under the R&D Tax Incentive program. This classification signifies that the outcomes of these trials cannot be predetermined and necessitate a systematic progression of work to generate new knowledge.
In practical terms, the determination covers phase 0, I, II, III, pre-market pilot stage, and pre-market pivotal stage clinical trials. Where such trials are occurring, the determination allows companies to register clinical trials as core R&D activities using the CTA or CTN provided when the trial is registered with the TGA. By incorporating the determination into the registration process, companies conducting clinical trials can navigate the R&D Tax Incentive program with confidence and ease. It not only expedites the registration process but also helps companies ensure that they accurately identify eligible costs and activities, fostering compliance with program requirements.
While the R&D Tax Incentive determination for clinical trials streamlines the registration process, there are several other program complexities to navigate. First, it's crucial to recognise that the determination applies to specific phases of clinical trials. There is also a list of explicitly excluded activities so it’s important to ensure that activities undertaken align with the program's criteria. The determination also pertains exclusively to clinical trials conducted within Australia (as opposed to work conducted overseas).
Overseas Clinical Trials
What if you need to conduct clinical trials overseas to ensure you collect data on a large, diverse population to confidently draw a conclusion from the clinical trial work? This is where an Advance Overseas Finding (AOF) will be needed. Whilst AOFs are not covered by the 2022 Determination, they can be requested if some of the project work is unable to be undertaken in Australia. By way of example, if the clinical trial ‘requires access to a population (of living things) not available in Australia’, an AOF may be obtainable and some overseas costs eligible for an R&D Tax Offset. Some of the situations we have seen where an AOF may be an appropriate strategy include:
Population Size
In relation to sample size, relying solely on the relatively small Australian population for clinical trials can often take several times longer to draw sound conclusions on the efficacy and safety of treatments. This can be further impacted by prevalence within Australia of the disease/health condition targeted in trials, potentially further limiting the population sample size available to draw a conclusion.
Population Diversity
To account for the lived experiences and exposures of various populations, clinical research must be appropriately inclusive of racial and ethnic minority groups and populations experiencing health disparities.
Increasing trial representativeness can improve the generalisability of findings, produce new insights and potentially yield various health strategies. Thus, it is essential that clinical trials include people with a variety of lived experiences, living conditions and population characteristics so that all communities benefit from the resulting scientific advances.
Population Environment
There are a variety of studies that demonstrate how a person’s environment can affect their health, and thus how their body will receive different treatments. The majority of trials that don’t address this disparity are expected to produce results that cannot be accurately applied to patients that live in vastly different environments.
Trials conducted solely in Australia often cannot adequately capture an understanding of the effectiveness of treatments on populations living in different environments, including predominant diets, exposure to different weather conditions and environmental stresses like pollution.
Clinical Trials Requirements
The population available for clinical trials may be further limited by individual clinical trial population restrictions and requirements. This includes, but is not limited to, the participant’s sex, age, health condition, previous treatments, estimated life expectancy, willingness to comply with study requirements, availability, and organ function.
The importance of clinical trials in generating new knowledge and improving healthcare outcomes cannot be overstated. With the support of the R&D Tax Incentive program, Australian biotech companies are better equipped to conduct high-quality clinical trials, contributing to the nation's GDP and the global medical research community.
However, the complexities of the program, particularly regarding the eligibility of costs and activities, must be navigated carefully. For those requiring overseas clinical trials, the Advance Overseas Finding (AOF) offers a pathway to include essential international work in the R&D Tax Offset. For further information on how to successfully navigate the overseas finding process for the R&DTI, please click here.
The combination of the clinical trials determination and the AOF provides a robust framework for supporting both domestic and international clinical trials. This ensures that Australian biotech companies can continue to innovate and lead in the global market, ultimately benefiting patients worldwide through improved treatments and therapies
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