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Concessional Tax Rates for Innovative Companies on the Horizon

Concessional Tax Rates for Innovative Companies on the Horizon

What’s new?

As part of the 2022-2023 Federal Budget, the Australian Government announced that it is extending the Patent Box regime to the agricultural and low emissions technology sector.

(Check out our highlight reel for this year’s Federal Budget announcement here).

The Patent Box intends to protect and promote home-grown innovation.  It does so by encouraging companies to commercialise onshore and by applying a concessional corporate tax rate to income derived from patents generated from eligible R&D activities.

The government will now extend the Patent Box for eligible agricultural and low emissions patents issued after 29 March 2022 to income years starting after 1 July 2023.

This extension is designed to support practical, tech-focused Australian innovation and commercial development, which aligns with key Australian Government priorities to reduce emissions to net-zero by 2050.

This, alongside the Australian R&D Tax Incentive and other Australian Government Grant funding programs provide a huge incentive for companies undertaking eligible R&D and commercialisation activities in Australia

What does this mean for eligible companies?

Taxable income from patents will be subjected to a reduced income tax rate of 17%.  This represents a significant reduction from the usual applicable corporate tax rates.

Is my patent eligible?

To be eligible, agricultural patents will need to be linked to agricultural and veterinary chemical products listed on:

  • The Australian Pesticides and Veterinary Medicines Authority (APVMA); or
  • PubCRIS (Public Chemicals Registration Information System) register; or
  • eligible Plant Breeder’s Rights (PBRs).

“With respect to low emissions technologies, patents will need to be based on technology developments that are considered to reduce emissions and:

  • Fall within 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 annual Low Emissions Technology Statements.”

Want to know more?

Our specialist R&D, Tax and Business Advisory teams at ABA are passionate about assisting you to bring your commercial visions to life, and can assist with:

  • R&D and Innovation Strategies, including identification of activities that may result in eligible patents;
  • Determining your R&D Tax Incentive eligibility (check out our R&D eligibility quiz here);
  • Identification of Government Grant funding opportunities;
  • Advice and assistance with tax planning and structuring strategies as you continue on your innovation and commercialisation journey.

For further information relating to the proposed Australian Patent Box regime, the R&D Tax Incentive or other Australian Government Grant funding opportunities, please click here.

Renee Levings
Want to know more? Speak to our team of experienced R&D Consultants today.

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