Australian patent box incentive
Research and innovation are central to Australia’s international competitiveness and a well-designed patent box will help bridge the gap to commercialisation, and support companies to keep the development of their IP and the value they create from it - especially by manufacturing locally - in Australia to benefit Australians.
A well-designed policy would provide an incentive to industry to locate high-value jobs, manufacturing, exports and economic benefits in Australia, rather than sending the benefits of innovative to more competitive jurisdictions. This approach is central to helping ensure that Australian bio-medical manufacturers remain competitive on an international scale.
Dovetailing with the R&D Tax Incentive, the patent box creates end-to-end motivation and will address the gap that leaves our IP vulnerable to relocation and support Australian innovators and manufacturers. It will make the commercialisation of IP and manufacturing in Australia more genuinely viable for businesses. It will offer sound, long-term structural policy that will benefit the country.
2021 Federal Budget announcement
AusBiotech welcomed the support for medical and biotechnology sectors as the Federal Treasurer announced a new patent box during the 2021 Federal Budget.
The announcement demonstrates the Government’s ongoing recognition of biotechnology as a long-term social and economic driver that will enhance Australia’s competitiveness and keep us at the cutting edge of science and innovation.
The work is just beginning. To achieve its full potential, the design of the patent box is key. As it currently stands, only patents applied for after the Budget announcement will be eligible, which means that the benefits will not be seen for many years. AusBiotech is looking forward to working together with Government to design a policy that will support industry as it’s intended to, and to deliver the results that the whole of Australia is keen to see.”
Patent box benefits
Innovative companies engaged in R&D would have a greater incentive to reinvest any tax saving from the patent box in further R&D, employment, plant and machinery, retaining and attracting highly-skilled jobs in Australia.
It would provide an offset against the tax payable on profits derived from the innovation and manufacture in Australia of qualifying patented Australian intellectual property. The profit from this IP would be taxed at the lower rate (at the time of announcement it was proposed at 17 per cent), with the standard corporate tax rate to be applied to other income.
Long-term advocacy delivers sector win
AusBiotech has been advocating for a patent box-style initiative for almost a decade, and has whole-heartedly commended the 2021 announcement.
In 2015, it partnered on the report, Who cares about Australia’s future: we do, urging the Federal Government to implement a patent box-style initiative it called the ‘Australian Innovation and Manufacturing (AIM) Incentive’.
The report positioned the AIM Incentive in a global context, referencing numerous other countries who had adopted similar policies to protect their local innovators and retain intellectual property. Among these countries are the UK, France, Switzerland and China.
The report was supported by Cook Medical, AusBiotech, the Export Council of Australia and Medical Technology Association of Australia (MTAA).
Read the 2015 report here.