Australian patent box scheme expanded
30 March 2022
In the context of the Government’s technology-focused approach to achieving net zero emissions by 2050, and commitments to supporting innovations in the agricultural sector, the Australian patent box regime will be expanded to include patents from low emissions technology innovations and the agricultural sector.
The patent box scheme, which was originally announced in the 2021-22 Budget and is still currently before Parliament, is designed to encourage businesses to keep their research and development (R&D) activities and registered patents in Australia.
Eligible corporate income derived from patents will be subject to an effective income tax rate of 17% for income years starting on or after 1 July 2023, down from the 30 percent income tax rate for large businesses and 25 percent rate for small to medium enterprises. However, the concessional rate only applies where R&D for an eligible patent granted or issued after 29 March 2022 takes place in Australia.
Patents relating to the agricultural sector are required to be linked to agricultural and veterinary chemical products listed on the Australian Pesticides and Veterinary Medicines Authority, the Public Chemicals Registration Information System register, or eligible Plant Breeder’s Rights.
Patents relating to the low emissions technology sector are required to be in the 140 technology areas listed in the Government’s 2020 Technology and Investment Roadmap Discussion Paper or included as priority technologies in the Government’s 2021 and future annual Low Emissions Technology Statements.
Multinational companies will be familiar the Australian patent box regime as similar regimes are currently used in over 20 jurisdictions, including the UK, Singapore and many European countries.
Finalisation of the detailed design of the expanded patent box regime will be subject to industry consultation.
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