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Australia Patent Box Legislation Introduced in Parliament — Orbitax Tax News & Alerts

Australian Treasurer Josh Frydenberg has announced the introduction of the Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022 in parliament on 10 February 2022, including a concessional tax rate of 17%.

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Patent Box legislation introduced into Parliament to support investment and jobs

The Morrison Government today introduced legislation to create Australia's first Patent Box to drive more investment, create more jobs and back Australian companies to commercialise their cutting edge innovations in Australia.

Under Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022 income earned from new patents that have been developed in Australia will only be taxed at a concessional rate of 17 per cent.

The Patent Box is a part of the Government's economic plan, announced as part of the 2021 22 Budget, which will increase investment by ensuring innovative Australian businesses are incentivised to commercialise their research and development in Australia.

This new concession, provided through Australia's patent box regime, will support research and development for decades to come, as well as help retain Australian innovations in Australia during commercialisation and complements the Government's additional $2 billion investment in the Research and Development Tax Incentive announced in the 2020 21 Budget.

Following consultation, the Government has made two significant expansions to the patent box:

  • allowing patents issued by the United States Patent and Trademark Office or granted under the European Patent Convention to access the regime; and
  • allowing patents granted after Budget night to be eligible, rather than only those applied for after Budget night.

Patents must link to a therapeutic good entered in the Australian Register of Therapeutic Goods to ensure the patent box concessions are targeted towards relevant medical inventions.

In line with internationally accepted standards and best practice, the legislation has been designed to be compliant with the principles outlined by the Organisation for Economic Co operation and Development.

The Patent Box is part of the Morrison Government's economic plan to drive more investment and to create more jobs.