Eligibility
R&D Tax Incentive Eligibility Criteria: Software Companies
How Division 355 eligibility works for Australian software companies: the core activity test, technical uncertainty, exclusions, evidence and offset rates.
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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.
Refundable offset up to 43.5% under $20m turnoverRegistration due 10 months after year end
Where does R&D actually live in health-tech and digital health companies?
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 that genuinely tests a pre-specified clinical or behavioural endpoint is usually not market research, though it is core R&D only if its outcome could not be known in advance.
What Health-tech work 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.
What evidence do health-tech and digital health companies 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.
What should health-tech and digital health companies watch out for?
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
Compliance & 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.
Read articleEligibility
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.
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.