New Australian ‘Patent Box’ scheme to further boost Australia’s post pandemic resilience

12 May 2021

The Australian Government has announced the introduction of a new ‘patent box’ scheme.

The announcement is one of several ‘Budget 2021’ initiatives designed to encourage further research and development investment in Australia, in the post pandemic global economy. The Australian economy has already demonstrated remarkable resilience in light of speed and scale of the Covid-19 measures introduced by the government last year, contracting by only 0.2 percent, and outperforming all other major developed countries in the world.

The ‘patent box’ is apparently named after a ‘box’ on the tax form where companies can declare income from qualifying IP commercialisation, to be taxed at a lower rate.

The general idea is that, for a patented product, the company declares how much of the income derivable from that product is attributable to the patent, and can pay a considerably lower tax rate on that part of the income, depending on how much of the research and development occurred in Australia.

Much of the detail of the scheme is yet to be worked out in consultation with industry, but what is known is that it will apply in relation to patents filed after 11 May 2021 and the tax concession will come into effect from 1 July 2022.

Further information is on page 3 of the Budget 2021 fact sheet at the following link: https://budget.gov.au/2021-22/content/factsheets/download/factsheet_tax.pdf

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