Are clinical trials eligible for the R&D Tax Incentive?

Phase 0 to III trials and pre-market pilot or pivotal studies of therapeutic goods not yet on the ARTG are deemed core R&D activities under the Clinical Trials Determination 2022, without needing the four-part test. Phase IV trials and generics are not deemed and rarely qualify.

Is there a cap on refunds for clinical trial spend?

No. A $4m annual cap on refundable offsets, with clinical trials exempt, was proposed in the 2018-19 Budget but never became law: the 2020-21 Budget said it would not proceed. The refundable offset is not capped; only notional R&D deductions above $150m a year earn the offset at the company tax rate alone.

Can we claim trials run overseas?

Only with a positive Overseas Finding from AusIndustry, applied for before the end of the income year in which the overseas activity starts, and only where conditions such as inability to conduct the work in Australia are met. Plan this well before year end.

We use a CRO. Whose R&D is it?

It depends on who bears the financial risk, controls the work, and owns the results. If that is effectively the CRO or a related entity rather than you, the activities may be 'conducted for' someone else and not claimable by you. The ATO has issued Taxpayer Alerts on these arrangements; structure them deliberately.

R&D Tax Incentive

The R&D Tax Incentive for biotech and life-science companies

Biotech is the program's home ground: hypothesis-driven science with long horizons and real experiments. The claiming questions for biotechs are rarely about whether the science qualifies; they are about structure, the clinical trial rules, overseas activity, and cash-flow planning around a refundable offset that can be a company's largest funding source.

Refundable offset up to 43.5% under $20m turnoverRegistration due 10 months after year end

Where does R&D actually live in biotech and life-science companies?

Discovery and preclinical work, assay development where performance is unknown, formulation and delivery problems without documented solutions, and clinical evaluation of unapproved therapeutics all carry the genuine scientific uncertainty the program was written for. The four-part test still applies outside the deemed-core trial categories: a documented hypothesis before the experiment remains mandatory.

What Biotech work qualifies, and what does not?

Activity	Eligible?	Why
Phase 0-III clinical trials of an unapproved therapeutic good	Likely core	Deemed core under the Clinical Trials Determination 2022
Preclinical and discovery experiments with documented hypotheses	Likely core	Classic scientific uncertainty and systematic progression
Developing a novel assay where sensitivity or specificity targets have no documented path	Likely core	Outcome unknown to a competent professional
Manufacturing batches solely to supply the trial	Supporting	Directly enables the core activity; watch feedstock and dominant purpose
Phase IV post-approval trials and bioequivalence studies of generics	No	Outside the Determination; ordinary test rarely met
Regulatory dossier preparation and GMP certification	No	Excluded compliance activity

Classifications are indicative: eligibility always turns on the specific facts, the four criteria in Division 355, and the records behind the work.

What evidence do biotech and life-science companies already produce?

Lab notebooks, study protocols, ethics approvals, CTN/CTX notifications, statistical analysis plans, batch records, and participant outcome data form the contemporaneous backbone. CRO contracts and invoices tie expenditure to activities. The discipline is linking every dollar, especially CRO and manufacturing spend, to a named registered activity.

What should biotech and life-science companies watch out for?

Two structural traps dominate biotech reviews. Conducted-for arrangements: if a CRO, associated entity, or foreign parent effectively bears the risk and owns the results, the R&D may not be yours to claim (Taxpayer Alerts TA 2023/4 and TA 2023/5 target exactly this). And overseas trial activity needs a positive Overseas Finding applied for before the end of the income year the overseas activity starts, not at registration time.

Frequently asked questions

Are clinical trials eligible for the R&D Tax Incentive?: Phase 0 to III trials and pre-market pilot or pivotal studies of therapeutic goods not yet on the ARTG are deemed core R&D activities under the Clinical Trials Determination 2022, without needing the four-part test. Phase IV trials and generics are not deemed and rarely qualify.
Is there a cap on refunds for clinical trial spend?: No. A $4m annual cap on refundable offsets, with clinical trials exempt, was proposed in the 2018-19 Budget but never became law: the 2020-21 Budget said it would not proceed. The refundable offset is not capped; only notional R&D deductions above $150m a year earn the offset at the company tax rate alone.
Can we claim trials run overseas?: Only with a positive Overseas Finding from AusIndustry, applied for before the end of the income year in which the overseas activity starts, and only where conditions such as inability to conduct the work in Australia are met. Plan this well before year end.
We use a CRO. Whose R&D is it?: It depends on who bears the financial risk, controls the work, and owns the results. If that is effectively the CRO or a related entity rather than you, the activities may be 'conducted for' someone else and not claimable by you. The ATO has issued Taxpayer Alerts on these arrangements; structure them deliberately.

Guides for biotech and life-science companies

22 Aug 2026Eligibility

Research and Development Tax Incentive: How It Works

What the R&D Tax Incentive is, who can claim, current offset rates, which activities and costs qualify, and how to register before the 30 April deadline.

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14 Aug 2026Compliance & Evidence

R&D Tax Incentive Record Keeping: Contemporaneous Evidence

What records the ATO and AusIndustry expect for an R&D claim, what contemporaneous really means, how long to keep them, and a checklist by claim stage.

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12 June 2026Compliance & Evidence

ATO R&D Tax Incentive reviews: what triggers them, how to be ready

A review is not a disaster if your claim is well-evidenced. Here is what tends to trigger an ATO or AusIndustry review of an R&D Tax Incentive claim, what they ask for, and how to be ready before one lands.

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The R&D Tax Incentive is a self-assessment program. This page is general information, not tax, legal, or financial advice; eligibility depends on your specific circumstances and you should seek independent advice for them.