The 2026-27 Federal Budget and Australia's Clinical Trials Reform Agenda: What International Sponsors Should Know

The 2026-27 Federal Budget, handed down by the Treasurer on 12 May 2026, confirmed substantial investment in Australia's clinical trials infrastructure. For international sponsors, three measures from the Budget are particularly relevant: continued funding for the National One Stop Shop (NOSS), stepped-up disbursements from the Medical Research Future Fund (MRFF), and continued support for the Precision Oncology Screening Platform Enabling Clinical Trials (PrOSPeCT) program.

The Budget also announced substantive reforms to the Research and Development Tax Incentive, effective 1 July 2028, with material consequences for biotech and pharmaceutical sponsors running Australian clinical trials.

The clinical trials and medical research package

The Government's research and clinical trials commitments in the 2026-27 Budget include the following specific allocations.

National One Stop Shop continuation. $15.8 million over two years from 2026-27 to continue development of NOSS, the single national platform for clinical trial approvals and human research administration.

PrOSPeCT continuation. $71.0 million over three years from 2026-27 to continue the Precision Oncology Screening Platform Enabling Clinical Trials program, providing patients with advanced, poor-prognosis and treatment-resistant cancers access to comprehensive genomic profiling.

MRFF disbursement increase. $508.5 million over four years to increase disbursements from the MRFF, with annual funding rising from $650 million in 2025-26 to $1 billion per year from 2030-31. The Government has stated that release of the additional funding is contingent on finalisation of the National Health and Medical Research Strategy, which is expected in the coming weeks.

NOSS: where it stands in May 2026

NOSS was announced on 2 May 2024 with an $18.8 million commitment from the Minister for Health and Aged Care to design and develop a single national system for clinical trial approvals, governance, and data. Two years on, the project remains in development.

The policy intent is that as part of NOSS, the Clinical Trial Notification (CTN) scheme, the Clinical Trial Approval (CTA) scheme, safety reporting of significant safety issues and urgent safety measures, and the Good Clinical Practice Inspection Program will be incorporated into the national platform. For international sponsors, the practical consequence is that the multiple separate streams of regulatory interaction with the TGA will eventually collapse into a single coordinated workflow.

NOSS sits within a broader policy framework. The Australian Commission on Safety and Quality in Health Care has developed the National Clinical Trials Governance Framework, which from 2026 is incorporated into the National Safety and Quality Health Service Standards. Hospital accreditation against the NSQHS Standards now extends to accreditation against the Governance Framework. A separate accreditation scheme for Human Research Ethics Committees is also under development.

The R&D Tax Incentive reform: a material change for 2028

The 2026-27 Budget contained substantive reforms to the Research and Development Tax Incentive (R&DTI), effective from 1 July 2028. The changes are the first stage of the Government's response to the Ambitious Australia: Strategic Examination of Research and Development Final Report released in December 2025. The reforms have direct consequences for clinical trial sponsors.

Higher core R&D offset rate. The offset for core R&D expenditure increases by around 25 to 50 per cent, through a 4.5 percentage point increase in core R&D offset rates. This is favourable.

Removal of supporting R&D eligibility. Under the current rules, eligible expenditure includes both core R&D (experimental activities where the outcome is unknown) and supporting R&D (activities directly related to core R&D, including data management, patient recruitment and analysis). From 1 July 2028, only core R&D will be eligible. Clinical trial sponsors should review their cost allocation methodology in anticipation, since a significant proportion of trial expenditure has historically qualified under the supporting R&D limb. The Strategic Examination of R&D Final Report had recommended a deemed rate for supporting activities rather than outright removal; the Government has chosen the harder line.

Refundable offset threshold raised from $20 million to $50 million. More medium-sized businesses will qualify for the refundable 43.5 per cent offset, aligning the threshold with the base rate entity threshold for the lower corporate income tax rate.

Refundability limited to firms under ten years of age. This is the most significant qualifier. From 1 July 2028, refundability of the offset will be available only to businesses operating for less than ten years. Older businesses below the $50 million turnover threshold will receive an equivalent non-refundable offset instead. For international biotech sponsors past their tenth year, this materially changes the cash-flow proposition of running clinical trials in Australia. Sponsors should assess where their group sits against this age threshold and whether the trial structure should be revisited.

R&D intensity threshold lowered from 2 per cent to 1.5 per cent. More firms with substantial core R&D expenditure will qualify for higher non-refundable offset rates. The Strategic Examination Report had recommended removing the intensity threshold altogether; the Government chose to lower it.

Maximum R&DTI expenditure threshold lifted from $150 million to $200 million. Larger claims can access the standard offset rate, though the Strategic Examination Report had recommended removing the cap entirely.

Minimum expenditure threshold raised from $20,000 to $50,000. Claims below $50,000 will need to be undertaken with a recognised research organisation (a Registered Research Service Provider or a Cooperative Research Centre).

The reforms are estimated to decrease receipts by approximately $910 million and decrease payments by $1.6 billion over five years from 2025-26.

What changes immediately for international sponsors, and what does not

In the near term, through the 12-month transition period to 13 January 2027 set by the TGA's adoption of ICH E6(R3), the legal framework for clinical trial conduct does not change. International companies commonly satisfy the requirement for an Australian sponsor by establishing an Australian-incorporated subsidiary (which can be wholly foreign-owned) or by appointing a local organisation, such as a Contract Research Organisation, to act as the sponsor. The CTN and CTA schemes continue to operate.

In the medium term, sponsors should expect three observable effects of the reform package. First, more coordinated ethics and governance approvals as NOSS components come online from 2027. Second, more consistent expectations for site activation under the National Clinical Trials Governance Framework. Third, a shift in R&D Tax Incentive treatment from 1 July 2028 that will require revised cost forecasting and, for sponsors past their tenth year, a reassessment of whether the trial vehicle structure remains optimal.

In the longer term, the cumulative effect of the reforms positions Australia as one of the more coordinated jurisdictions for international clinical trials. The package sits alongside parallel modernisation in the United Kingdom, where the most substantial overhaul of clinical trial regulation in twenty years took effect in April 2026.

Practical steps during the transition window

Sponsors with active or planned Australian trials should review their structuring against the R&DTI reforms now, in preparation for 2028. Two issues require particular attention. First, the removal of supporting R&D eligibility means that cost allocation methodologies developed under the current rules will need adjustment. Second, the refundability age limit means that older sponsors should consider whether their Australian trial vehicle structure should be revisited to preserve cash-flow benefits.

Sponsors should also confirm that their Clinical Trial Research Agreements address the ICH E6(R3) annotations finalised in December 2025, including record retention obligations and trial registration requirements.

For sponsors considering a first Australian trial, the reform package strengthens rather than disrupts the case for Australia. The continued NOSS investment, the MRFF trajectory, and the regulatory streamlining all support the long-term proposition, even with the R&DTI changes.

How Opportuna Legal can help

Opportuna Legal can assist international pharmaceutical and biotechnology companies with TGA regulatory compliance, sponsor structuring, and R&D Tax Incentive eligibility for clinical trials. If you are planning or running clinical trials in Australia, please contact Opportuna Legal.

Contact: reception@opportunalegal.com.au | +61 8 6110 3748

Anthony Jarvis | Director, Opportuna Legal

Anthony Jarvis is the Director of Opportuna Legal, a corporate and commercial law firm based in Perth, Australia. Anthony advises private companies, founders, and boards on M&A, capital markets, corporate governance, and commercial contracts. Anthony can assist international pharmaceutical and biotechnology companies with Australian clinical trial regulation, sponsor compliance, and CTRAs.

This article is general information only and does not constitute legal advice. Readers should obtain professional advice specific to their circumstances before acting on any of the information contained in this article.