These tax credits are available to pharmaceutical and biotechnology to incentivize drug development and clinical research in countries around the world. In this article we will discuss Australian R&D tax incentive program (R&DTI), which is part of local government’s key strategy to boost innovation in drug development and support R&D activities in the private sector for the Australian economy.
AUS Biopharma companies are considered a critical hub of innovative drug development, and the AUS’s R&D tax relief program, also referred as to the R&D Tax Incentive or R&DTI is a targeted, generous, and easily accessed entitlement program to stimulate industry investment and support drug development innovation conducted in the country. Indeed, registered eligible notional deductions (R&D expenses) can be claimed on activities performed throughout the drug development process.
The Australian government has a very helpful website that explains how the process works. In 2020, the Australian Taxation Office issued a R&DTI guide to interpretation assisting R&D eligible entities in accurately selecting registered eligible activities and their associated costs. With regard to its generosity, the R&DTI targeted tax incentive program offers a dual mechanism, either refundable or non-refundable tax offset depending on an aggregated turnover ceiling of $AUD 20M (refundable below and non-refundable above) from R&D entities subjected to corporate tax in Australia. For each entity, and on an annual basis, it is necessary to complete a 5-step process in order to define the amount of eligible R&D allowance. R&DTI popularity is also correlated to the diversity of eligible expenses that can be annually included, from R&D staffing costs to subcontracted R&D to Australian RSP-accredited research organizations.
As the first biomarker-driven clinical development CRO, Precision AUS is highly engaged in innovative research and development and has been approved as a Research Service Provider (RSP) by Industry Innovation and Science Australia and recognized as a specialist organization capable of providing scientific or technical expertise and undertake R&D on behalf of Pharma & Biotech companies. This Australian approved status enables our AUS sponsors to lower their costs of innovation by recovering generated in R&D activities costs outsourced to Precision AUS.
Learn more about Precision Australian RSP status >
Unlike large companies which are more likely to exceed a $20M AUD celling on an annual basis, Small and Mediums enterprises (SMEs), with less than annual $20M AUD, can claim a refundable offset, the amount of which is fixed by multiplying the notional deduction by their corporate rate plus a 18.5% premium bonus (generally 43,5% for SMEs).
If you are an eligible registered R&D entity, as defined by the Australian government, and want to claim your R&D tax credits as a refund, we encourage you to learn more on their website.
Providing customized CRO solutions from late pre-clinical stage all the way through post-launch clinical trials, Precision for Medicine offers a unique partnership to promote innovation in Australia, prioritizing R&D activity development locally and maintaining close collaboration with AUS R&D centers of excellence. Below is a list of available services based out of the AUS.
For innovative biopharma companies looking to tap into AUS R&D tax credits, it will be critical to work with a partner with services and staff in AUS. This is where Precision can support your drug development innovation.