In its Budget 2022-23, the Australian Government announced major expansions to the proposed ‘Patent Box’ scheme providing concessional tax treatment to eligible income for Australian corporate taxpayers.
The Government will now expand the scheme to support innovations in the Australian agricultural sector, specifically:
- Corporate taxpayers who commercialise their eligible patents linked to agriculture and veterinary (agvet) chemical products listed on the Australian Pesticides and Veterinary Medicines Authority (APVMA), PubCRIS (Public Chemicals Registration Information System) register; and
- Corporate taxpayers who commercialise their eligible Plant Breeder’s Rights (PBRs).
In addition, the Government will provide concessional tax treatment for corporate taxpayers who commercialise their patented technologies which have the potential to lower emissions and are:
- Set out in the 140 technology areas listed in the Australian 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 Statement.
Where R&D of the innovation took place in Australia, eligible corporate income will be subject to an effective income tax rate of 17% for PBRs and patents granted or issued after 29 March 2022, and for income years starting on or after 1 July 2023. This is compared to the current tax rate of 30% for large companies and 25% for small enterprises.
In developments since the Budget 2021-22*, for medical and biotechnology patents to be covered by the Patent Box regime, a patent must be linked to a therapeutic good that is included on the Australian Register of Therapeutic Goods (ARTG). Where the R&D occurred in Australia, the Patent Box scheme will now also encompass:
- Patents granted or issued after 11 May 2021, as well as patents having a priority date after 11 May 2021; and
- Standard patents granted by IP Australia, utility patents issued by the USPTO and European patents granted under the EPC.
We encourage local and international innovators to look for opportunities to collaborate and take advantage of the Australian Patent Box scheme.
*See our update of 1 June 2021.
Disclaimer: Although a new Australian Government was appointed on 23rd May 2022, we expect that the Patent Box scheme will be maintained. For general information purposes only. Not intended as legal or tax advice. Please contact us should you require assistance regarding patent or PBR/PVR protection in Australia or New Zealand