The R&D Tax Incentive – Supporting Medical, Health and Life Sciences Research

r&d tax incentive medical

Are you in the medical, health or life sciences sector? Is your company developing cutting-edge technology?

If you answered yes, then you’re in good company! Registered expenditure for the R&D Tax Incentive scheme on Medical, Health and Life Sciences (MHLS) has grown by 50% from 2012 to $1.6b in 2015. Most research fields in the sector are growing, even while R&D expenditure in other sectors has decreased. Clinical Sciences is leading the way as the fastest growing field in the MHLS sector.

This increased R&D in the health and life sciences sector indicates a strong future for medical research in Australia.

Medical, Health and Life Sciences – a broad field

MHLS is a broad field covering biotechnology, medicinal drugs and surgical equipment as examples. Data indicates that the strongest R&D growth is in small companies (turnover of less than $500,000) and very large companies (turnover of more than $50 million), with most situated in NSW or Victoria.

Over 1200 businesses working in the MHLS sector receive support from the R&D Tax Incentive, and your business could be eligible for these benefits too.

MHLS Research – what is eligible under the R&D Tax Incentive?

Whether you’re already registering your R&D or you’re new to the process, AusIndustry has published specific guidance for companies working in biotechnology that can help you understand how to claim the R&D Tax Incentive and whether your R&D is eligible.

Included in this guidance are hypothetical examples of firms developing products and processes across the MHLS sector. The guidance document discusses what is considered eligible R&D and provides examples of what can be used as supporting evidence.

One hypothetical firm, Encapsulate, tested a compound to determine its suitability as a therapeutic agent for Parkinson’s disease. Their test work was an eligible core R&D activity because:

  • the binding and transport characteristics of their compound had not been tested before so the work was carried out for the purposes of generating new knowledge.
  • the results of the tests could not be predicted or known without conducting the test work.
  • the testing was driven by hypotheses and followed a systematic and scientific progression of work.

Encapsulate wrote an R&D plan before starting the tests which included hypotheses, methods and evaluations that would be carried out. This type of evidence is not only useful to record ideas, it is a requirement of the R&D Tax Incentive that companies keep evidence of their R&D work.

Another hypothetical company, Biofnatics, developed an improved biodegradable coronary heart stent. This helpful video discusses why their clinical trials were an eligible core activity and what type of work carried out overseas is eligible to be claimed under the R&D Tax Incentive.

AusIndustry also showcases customer stories from Australian firms that have received support from the R&D Tax Incentive to develop novel products in the MHLS field.

About the author

Dave Sammut – Associate at Access RnD
BSc (Hons, Ind. Chem), MBT, MRACI

Dave Sammut has degrees in both science and business, and has worked for 20 years in active R&D, R&D corporate management and commercialisation, and in professional communications to government and investor audiences. Dave specialises in facilitating the effective communications between different technical and non-technical disciplines, with a track record in creating value through innovation.

Access RnD is a boutique, independent specialist tax consultancy on the R&D Tax Incentive program as well as Export Market Development Grant (EMDG), and other Federal Government funding programmes, including the AusIndustry Commercialisation Australia grants programme.