Announcement date
10 February 2022
Link to announcement
https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/patent-box-legislation-introduced-parliament-support
Problem being addressed
Over the last 20 years, a number of factors have emerged that have worked to disincentivise the development and retention of intellectual property (IP) assets in Australia’s tax jurisdiction, along with the research and development (R&D) operations that underpin them. The comparatively high Australian headline corporate income tax rate, relative to other OECD countries, and the numerous low-rate patent box regimes in other jurisdictions, means there is an incentive for IP that would otherwise be developed in Australia to be developed and retained offshore.
While these issues are not unique to the medical and biotechnology sector, they appear to have a significant impact in this sector.
Proposal
The preferred option was to introduce a patent box regime for the medical and biotechnology sector, whose design takes into account feedback from consultation with industry on the announced regime. ‘Patent box’ is a generic term for regimes that apply a concessional tax treatment to profits derived from eligible intellectual property. Currently, over 20 jurisdictions, including the UK, Singapore and many European countries have patent boxes or other regimes that offer concessional tax treatments to IP derived profits.
Assessed RIS outcome
Adequate
Regulatory burden
The Department of the Treasury estimates that this measure will result in annual regulatory costs of $2.2 million on average, over 10 years.
Please note: any accessibility enquiries should be directed to the Treasury.