Federal Budget 2021-22: Australian Patent Box Regime
Tax Law - 12 May 2021
The introduction of an Australian patent box regime highlights the Government’s commitment to investing in our medical and biotech industries as the Australian economy emerges and recovers from the impacts of the COVID-19 pandemic. The patent box regime has been adopted by many other countries, and will offer competitive tax rates for medical and biotech industries to encourage the commercialisation of research and development activities in Australia.
From 1 July 2022, the Government will apply a concessional effective corporate tax rate of 17% for income derived from Australian patents in the medical and biotech industry. As the corporate tax rate will reduce to 25% for base rate entities and will be 30% for all other entities from 2021-22, the proposed patent box introduction results in a tax rate reduction of 8% or 13% respectively. This is great news for companies the medical and biotech industries commercialising in Australia.
The regime will only apply to patents granted or applied for after 11 May 2021 (Budget 2021-22 announcement). The Government is intending to follow OECD guidelines on patent boxes to ensure adherence and consistency with internationally accepted principles.
In addition, there will be an extensive industry consultation process and an assessment as to whether the clean energy sector will also benefit from a patent box program. Watch this space!
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