The Australian government on July 5 launched a consultation on the design of its planned patent box regime announced in the 2021-22 budget released in May.
The patent box is intended to encourage companies to base research and development (R&D) related to medicine and biotechnology in Australia and to retain ownership of their patents in the country. It is proposed to apply for fiscal years beginning on or after July 1, 2022.
In Australia, corporate profits derived from intellectual property are generally taxed at the relevant corporate income tax rate, which as of July 1 is either 25% or 30%, depending on the company’s size. The patent box would apply a reduced rate of 17% for eligible patent-related income.
The consultation seeks feedback on the best way to design the patent box regime to suit medical and biotechnology patents.
In addition to the medicine and biotechnology fields, the government asks in the consultation about potentially expanding the patent box to low emissions technology.
The government also requests additional input in designing the patent box with respect to the substantial activity requirement, implementation and start date, eligible revenue, subtraction of related expenses, and treatment of losses.
Comments will be accepted until August 16.
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