R&D Tax Incentive
The R&D Tax Incentive for health-tech and digital health companies
Health-tech companies often under-claim because they frame themselves as software businesses. Division 355 is domain-neutral: uncertainty about whether an intervention works clinically is just as eligible as uncertainty about whether a system can be built. For many digital health products the strongest core activity is the clinical question, with the software build supporting it.
Where the R&D actually lives
Two kinds of unknowns qualify. Technical: can the platform be built to the required performance. Clinical: does the intervention actually move a health outcome, such as whether an app-delivered program measurably reduces symptom severity. The clinical question is tested against the worldwide clinical literature, and a structured study measuring a pre-specified clinical or behavioural endpoint is core R&D, not market research.
What qualifies, and what does not
| Activity | Eligible? | Why |
|---|---|---|
| A structured study testing whether your digital intervention improves a pre-specified clinical endpoint | Likely core | Genuine clinical uncertainty, systematic experiment |
| Adherence or engagement experiments with a pre-specified behavioural endpoint (for a digital therapeutic, adherence is the dose) | Often core | Behavioural endpoint, unknown outcome; the same test measured on revenue is excluded |
| Building the app and data infrastructure needed to run the clinical study | Supporting | Directly enables the clinical core activity |
| A/B tests measured on conversion, churn, or revenue | No | Excluded market research |
| TGA submissions, certification, post-market surveillance | No | Excluded regulatory compliance |
| Usability testing without a pre-specified clinical or behavioural endpoint | No | No hypothesis about a health outcome |
Classifications are indicative: eligibility always turns on the specific facts, the four criteria in Division 355, and the records behind the work.
The evidence you already produce
Clinical R&D has its own evidence hierarchy: study protocols, ethics (HREC) approvals, statistical analysis plans, participant outcome data, literature reviews, and investigator notes. Combined with the engineering trail from the build, health-tech companies can assemble unusually strong claims, provided the endpoint was specified before the experiment ran.
Watch-outs for health-tech and digital health companies
The endpoint decides everything: the identical experiment is core R&D when measured on symptom severity and excluded market research when measured on conversion. Wellness apps outside TGA regulation are not therapeutic goods, so they use the ordinary four-part test rather than the Clinical Trials Determination. And trials run through CROs or overseas raise conducted-for and Overseas Finding questions that need attention before year end.
Frequently asked questions
- Can a health app claim the R&D Tax Incentive for clinical studies?
- Yes. Division 355 covers scientific uncertainty, not just engineering. A structured study testing whether your intervention improves a pre-specified clinical or behavioural endpoint can be a core R&D activity, with the software build as a supporting activity.
- Are clinical trials automatically eligible?
- Phase 0 to III trials and pre-market pilot or pivotal studies of an unapproved therapeutic good (not yet on the ARTG) are deemed core R&D activities under the Clinical Trials Determination 2022. Phase IV trials, generics, and the market-research components are not covered.
- Is user testing of our health app claimable?
- Only when it is a structured experiment against a pre-specified clinical or behavioural endpoint. Usability testing and feedback sessions without such an endpoint are not core R&D, and anything measured on commercial metrics is excluded market research.
- Does TGA regulatory work qualify?
- No. Regulatory compliance work such as TGA submissions, dossier preparation, certification, and post-market surveillance is an excluded activity. The research that generates the evidence inside the dossier may qualify; the compliance work itself does not.
Guides for health-tech and digital health companies
R&D Tax Incentive for software development: 2026 guide
Software is one of the most-claimed and most-scrutinised areas of the R&D Tax Incentive. This guide maps the four eligibility criteria to real software work, with examples of what qualifies, what does not, and the traps that sink claims.
Read articleContemporaneous evidence for a defensible R&D claim
Eligibility gets you in the door. Evidence keeps you there. This guide covers what contemporaneous records the ATO and AusIndustry expect, the evidence hierarchy that holds up in a review, and the documentation habits that make a claim defensible.
Read articleThe R&D Tax Incentive, explained end to end: 2026 guide
The complete path through an R&D Tax Incentive claim: who is eligible, what the offset is worth, how activities are defined, what evidence you need, and the registration and lodgement steps that turn eligible work into money in the bank.
Read articleThe 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.