Information provided by Phillips Ormonde Fitzpatrick
The Federal government will launch a patent box scheme targeted at the medical and biotechnology sector. The scheme, to apply from 1 July 2022, is aimed to further encourage the commercialisation of medical and biotechnology innovations in Australia.
Under the patent box, income derived from eligible patents will be taxed at a concessional rate of 17%, a reduction of 8% for SMEs and 13% for large businesses. At this stage, the scheme will apply to income derived from Australian-owned and developed medical and biotechnology patents applied for after 11 May 2021.
The aim of the patent box is to encourage businesses to retain or locate the development, manufacture and exploitation of patents to their innovations in Australia.
Patent box schemes are already in place in many European countries and the innovation sector has advocated for a similar scheme in Australia for many years on the basis that it is vital to attract companies to invest and maintain that investment in Australia. The government has indicated that it will follow the OECD’s guidelines on patent boxes to ensure it meets internationally accepted standards.
A consultation process with industry will occur prior to the July 2022 launch. Initial submissions to the Discussion Paper on Policy Design closed on 16 August 2021.Therefore, precise details of the scheme will not be known until submissions have been considered. For the patent box to be of value, key considerations must take into account the definition of an eligible patent, the definition of a medical or biotechnology patent, whether costs associated with conducting R&D and various clinical trials outside of Australia apply, and whether patents held by companies located elsewhere, but where an Australian based company has an exclusive licence to exploit the patent, can access the scheme.
We will keep you updated on developments as details become known.
Scott Whitmore PhD
Phillips Ormonde Fitzpatrick
08 8224 9901