Patent box legislation: everything you need to know

Patent box legislation: everything you need to know

 Clayton Utz’s Natalie Shoolman and Louisa Wu discuss the IP and tax implications arising from the proposed Australian patent box, as expanded by this year's Budget announcement.

In the recent Federal budget, the Government announced it will introduce a patent box tax incentive, effective from 1 July 2022.

The 'patent box' tax incentive, named after the ‘patent' box that you tick in your tax return, allows companies to pay a lower tax rate on income generated through the commercialisation of patented technology.

While specific details are yet to be developed what it generally means is that profits derived from the commercialisation of patented technology developed in Australia and owned in Australia will be subject to a reduced corporate tax rate of 17% (compared with the standard corporate income tax rates of 30% generally and 25% for small to medium enterprises).

At this stage the incentive is limited to profits from the commercialisation of medical and biotech patents, although the government has hinted that it may extend it to other industries (such as 'clean technology'). 

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