Eligibility
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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The R&D Tax Incentive for medical device and medtech companies
Medical device development runs on exactly the systematic method Division 355 rewards: specified hypotheses, controlled bench and clinical testing, documented evaluation. The claiming challenge for medtech is separation: the same program of work contains genuine experiments, deemed-core trials, routine verification, and excluded regulatory activity, and each piece must be classified on its own.
Refundable offset up to 43.5% under $20m turnoverRegistration due 10 months after year end
Where does R&D actually live in medical device and medtech companies?
Eligible uncertainty appears in device physics and engineering (can the sensor reach clinical-grade accuracy at this size and power budget), in algorithms interpreting physiological signals, in biocompatibility and materials questions without documented answers, and in whether the device actually delivers the clinical outcome. Pre-market pilot and pivotal trials of devices not yet on the ARTG are deemed core activities.
What Medtech work qualifies, and what does not?
| Activity | Eligible? | Why |
|---|---|---|
| Developing a sensor or signal-processing algorithm to clinical-grade accuracy no documented approach reaches | Likely core | Genuine technical uncertainty |
| Pre-market pilot and pivotal clinical trials of an unapproved device | Likely core | Deemed core under the Clinical Trials Determination 2022 |
| Building prototypes and test fixtures solely for those experiments | Supporting | Directly enables the core activity |
| Routine verification and validation against a known specification | No | Excluded routine testing; outcome not uncertain |
| TGA conformity assessment, technical file preparation, ISO 13485 certification | No | Excluded regulatory compliance |
| Tooling up for manufacture of an already-proven design | No | Reproducing a product from existing specifications |
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 medical device and medtech companies already produce?
Design history files, bench test protocols and results, engineering notebooks, risk analyses that surface unknowns, study protocols, ethics approvals, and trial outcome data. Medtech documentation culture is strong; the gap is usually the same as everywhere else: hours. Link engineers' and clinicians' time to specific registered activities as it is spent.
What should medical device and medtech companies watch out for?
The verification boundary is the recurring review question: testing to confirm a device meets a specification you were already confident of is routine (excluded), while testing to resolve whether an approach can work at all is experimental. Classify honestly by what was unknown when the test was designed. Regulatory work is excluded even though the same documents feed the technical file, and manufacturing scale-up of a settled design is reproduction, not research.
Frequently asked questions
- Is medical device development eligible for the R&D Tax Incentive?
- Large parts often are: resolving genuine device engineering unknowns, algorithm development, and pre-market clinical trials of unapproved devices (deemed core under the Clinical Trials Determination 2022). Routine verification and regulatory work are not.
- Does verification and validation testing qualify?
- Testing that resolves a genuine unknown, designed as an experiment with a hypothesis, can be core. Routine verification that a design meets a known specification is excluded routine testing. What was uncertain when the test was designed decides the classification.
- Do TGA approval activities qualify?
- No. Conformity assessment, technical file preparation, and certification are excluded compliance activities. The experiments whose results feed those documents may qualify in their own right; the regulatory work does not.
- Are device trials covered like drug trials?
- Yes. The Clinical Trials Determination 2022 deems pre-market pilot and pivotal trials of therapeutic goods not yet on the ARTG, including devices, to be core R&D activities. Post-market studies fall outside it.
Guides for medical device and medtech 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.
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Core vs supporting R&D activities, and why it now matters more
The distinction between core and supporting R&D activities has always mattered. From 1 July 2028 it becomes decisive, because supporting activities lose eligibility. Here is how to tell them apart and classify your work correctly.
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.