Australia expands patent box scheme to plant rights and green tech
The Australian government has unveiled plans to expand its patent box scheme to include the agricultural and low emissions technology sectors, just one year after the tax breaks were introduced.
In May last year, the government announced the introduction of a patent box scheme applying to biotech and medical technology innovations which would come into effect on July 1, 2022.
Under the scheme, corporate taxpayers would pay an effective tax rate of 17% in respect of income derived from the exploitation of qualifying patents. And, in order to be eligible, a patent must be linked to a therapeutic good included on the Australian Register of Therapeutic Goods. This register includes medicines, medical devices and other goods used for therapeutic purposes.
However, despite announcing the scheme in the 2021-22 budget, it seems that legislation to allow the initiative is still before Parliament and has not yet been passed. The bill was introduced to the House of Representatives on February 10.
Despite this, the government has announced in its 2022-23 budget the expansion of the scheme to include agricultural innovations and low emissions technologies.
On the agriculture front, the government said it would provide concessional tax treatment for corporate taxpayers that commercialise their eligible patents linked to agricultural and veterinary chemical products listed on the Australian Pesticides and Veterinary Medicines Authority, Public Chemicals Registration Information System register, or eligible Plant Breeder’s Rights (PBRs).
The move to expand the patent box scheme to the low emissions technology sector seeks to support the government’s “technology-focused approach to reducing emissions in line with the government’s target to achieve net-zero emissions by 2050”, according to the budget.
Only patents relating to low emissions technology, as set out in the 140 technology areas listed in the Australian government’s 2020 Technology and Investment Roadmap Discussion Paper or included as priority technologies in the government’s 2021 and future annual Low Emissions Technology Statements will be within scope, as long as the patented technology is considered to reduce emissions.
Australia currently taxes profits generated by PBRs and patents on agricultural and veterinary products at the corporate rate (30% for large businesses and 25% for small enterprises).
Eligible corporate income will be subject to an effective income tax rate of 17% for PBRs and patents granted or issued after March 29, 2022, and for income years starting on or after July 1, 2023.
In addition to expanding the scheme, the government has also made changes to its existing plan for the biotech and medical technology sectors.
Now, standard patents granted by IP Australia, utility patents issued by the US Patent and Trademark Office (USPTO), and European patents granted under the European Patent Convention (EPC) are eligible.
“This will remove regulatory barriers to accessing the patent box regime for Australian developed innovations patented in the major overseas jurisdictions with equivalent patent regimes. However, taxpayers will still only benefit from the concessional tax treatment under the patent box to the extent that the R&D occurred in Australia,” said the budget.
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