January 20th, 2022
AusIndustry has recently released a draft Industry Research and Development (clinical trials, Phase 0, I, II, III for an unapproved therapeutic good) Determination 2021 for consultation and feedback.
This is the first R&D Tax Incentive determination published, and AusIndustry noted that they have consulted with the Australian Taxation Office and Department of Health as part of the coalition of this document.
The draft document notes that:
- In respect of classifying the phase of a trial:
- Phase 0 clinical trial means exploratory studies or pilot studies that are used to test how the body responds to an unapproved therapeutic good before Phase I clinical trials;
- Phase I clinical trial means clinical trials that involve the first administration of the unapproved therapeutic good on humans to determine the safety of the good, how it works, how well it is tolerated, to identify preferred routes of administration;
- Phase II clinical trials are the first trials of the unapproved therapeutic good in patients suffering from the condition for which the good is intended. The principal aim of these clinical trials is to determine effectiveness and safety of the unapproved therapeutic good;
- Phase III clinical trials involve greater numbers of patients compared to phase I clinical trials and phase II clinical trials and are undertaken for the purpose of determining whether the unapproved therapeutic good confers clinical benefit for which effectiveness was demonstrated in phase II clinical trials. They also determine the nature and likelihood of any side effects;
- Phase IV clinical trials are those clinical trials undertaken in Australia after the previously unapproved therapeutic good has been approved (either in, or external to Australia) for the treatment of a particular disease. Phase IV clinical trials may relate to a good that is registered in another country at the time the trial is being conducted in Australia. Phase IV clinical trials may be a follow-on study from a previous trial and the rationale is that the data from the trial is being used to support a post-marketing study. Phase IV clinical trials are also undertaken to further investigate the use of the good in the normal clinical setting of the disease, as this may differ quite markedly from the conditions under which the other clinical trials were conducted. This includes post-marketing surveillance studies.
- In respect of eligibility of clinical trials under the R&D Tax Incentive:
- Phase 0 clinical trials, phase I clinical trials, phase II clinical trials, and phase III clinical trials for an unapproved therapeutic good ARE Core R&D Activities where they relate to goods that are:
- (a) notified pursuant to item 3 of Schedule 5A of the Therapeutic Goods Regulations 1990 or item 2.3 of Schedule 4 to the Therapeutic Goods (Medical Devices) Regulations 2002; or
- (b) approved pursuant to sections 19(1)(b), 32CK(1)(e) or 41HB(1)(e) of the Therapeutic Goods Act 1989.
- NONE OF THE FOLLOWING WILL BE CORE R&D ACTIVITIES:
- any clinical trials of generic products;
- phase IV clinical trials;
- activities that come within the scope of subsection 355-25(2) of the Income Tax Assessment Act 1997;
- activities that are not, or will not be, conducted in accordance with all applicable approvals, regulatory requirements, and standards that are in force at the time the phase 0 clinical trials, phase I clinical trials, phase II clinical trials, or phase III clinical trials are being conducted.
The above determination is generally consistent with existing understandings of the eligibility of clinical trials. The publication is however welcome in providing greater clarity and certainty for companies who may wish to register such activity under the R&D Tax Incentive.
For further information and advice regarding your R&D Tax Incentive claim, visit the AusIndustry website or contact us here.