The federal government has tabled the legislation that will see the introduction of a 'patent box' designed to provide an incentive for Australian developed innovations.
The Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022 was tabled in the federal parliament earlier today.
According to the explanatory memorandum, "The Bill amends the ITAA [Income Tax Assessment Act 1997] 1997 to introduce the patent box regime which provides concessional tax treatment for ordinary and statutory income derived by a corporate taxpayer from exploiting a medical or biotechnology patent."
The change will apply to patents granted or issued after 11 May 2021 in respect of income years starting on or after 1 July 2022.
Under the change, income directly attributable to the eligible patent will benefit from being subject to an effective income tax rate of 17 per cent, to the extent that the taxpayer undertakes the R&D of that patent in Australia.
"This concession is designed to encourage innovation and commercialisation of medical and biotechnology inventions to occur and remain in Australia," says the explanatory memorandum.
AusBiotech CEO Lorraine Chiroiu said the association “notes the progression of the patent box legislation as a positive first step.”
“AusBiotech looks forward to the establishment of an expert working group, with industry representation, to support the implementation of the patent box scheme – in order for Australia to realise the benefits of this important incentive," said Ms Chiroiu.
“This tax concession, from AusBiotech’s perspective, aims to support Australian medical innovators to be globally competitive, retain value creation from home-grown research and IP, and to support sovereign capability. Its purpose is to make it more genuinely viable for businesses to retain this value creation and manufacturing in Australia, including providing an incentive to industry to locate the associated high-value jobs at home.”
Cochlear and CSL also welcomed the tabling of the legislation.
“Australia has an outstanding record in medical research. However, Australia’s record in commercialising that research is not as strong. The patent box legislation makes Australia a more competitive country to commercialise research, which will create local jobs and build our sovereign capability in medical products manufacturing.” said Dig Howitt, Cochlear CEO and President.
CSL's chief financial officer said, "Market based policy initiatives, like the patent box, that are focussed on the revenue-generating phase of the medical research value chain should help reduce the offshoring of Australian intellectual property and actively incentivise the onshore commercialisation of world class Australian research.
"As a strong advocate for the growth of the Australian biotech sector, CSL looks forward to working with Government to ensure that the design and implementation of the patent box meets the stated policy objectives and supports local advanced manufacturing and domestic capability in critical medical and biotech products."