The Parliament's Joint Committee on Trade and Investment Growth has released the report from its Inquiry into Australia's Future in Research and Innovation, which examined Australia's innovation system.
Amongst a number of recommendations focussed on promoting growth in Australia's innovative sectors, the Committee recommended Treasury examine introduction of a patent box scheme and an Advanced Manufacturing Tax.
Patent boxes are policies, which are currently maintained by 11 European countries, that seek to encourage the retention of intellectual property and commercialisation in country through the use of targeted tax incentives.
The incentives, often in the form of concessional tax rates, apply to the income generated from certain types of qualifying intellectual property, such as patents.
The Committee said it was "attracted" to the use of a patent box as a way to encourage R&D and that such the measure warrants close examination.
"The patent box is an expensive measure which can be manipulated, however, the increased innovation outcome is uncertain," it said. "The Committee understands that the UK’s patent box, introduced in 2013, closed after three years in operation and is currently being reviewed. If a patent box measure were to be introduced in Australia, it should be subject to a sunset clause followed by a review of its effectiveness and whether it should be extended and for how long."
In relation to the Advanced Manufacturing Tax , the Committee noted the proposal from CSL and recommended Treasury consider its introduction.
CSL proposed a concessional tax rate of not more than 10 per cent on new advanced manufacturing undertaken in Australia. The company said the proposal would not diminish existing tax revenues, would only apply to investment that would not otherwise take place in Australia and require intellectual property to be tied to advanced manufacturing.
The Committee said it had received insufficient evidence to thoroughly test the concept of an Advance Manufacturing Tax but said it should be closely examined by Treasury.
"Should such a tax be introduced, it should be subject to a sunset clause at which point a review should be undertaken to determine its effectiveness and whether it should be continued," said the Committee.