The 2022-23 Federal Budget, delivered by Treasurer Josh Frydenberg last night, has provided further incentives to Australian innovators.
Pleasingly, the Government has expanded the Patent Box Scheme to agricultural and low emissions technology sectors. The expansion is notable in that, despite significant industry advocacy to extend the Patent Box Scheme to these industries, the bill introduced in February of this year was limited to medical and biotech inventions.
The expansion to cover low emissions technology sectors makes sense and aligns with the Government’s technology-focused approach to reducing emissions to achieve net zero emissions by 2050. Eligible patents will be those considered to reduce emissions.
Perhaps less expected, although no doubt welcome, is the extension to Australia’s highly innovative agricultural sector. Importantly, the scheme also covers relevant Plant Breeder Rights (PBRs) as well as agricultural patents. Eligible patents are those linked to agricultural and veterinary chemical products listed on the Australian Pesticides and Veterinary Medicines Authority, or the Public Chemicals Registration Information System register.
The Patent Box Scheme broadly provides concessional tax treatment for income derived by a corporate taxpayer from exploiting a medical or biotechnology patent. Eligible income will be subject to a lower effective income tax rate of 17 per cent, which is designed to encourage innovation and commercialisation of inventions in Australia.
Relevantly, the scheme for medical and biotechnology patents is set to start on 1 July 2022 for patents granted or issued after 11 May 2021. For the low emissions technology and agricultural sector, the scheme is set to start on 1 July 2023 and cover patents or PBRs granted or issued after 29 March 2022.
The Government has indicated it will consult with the low emissions and agricultural industries before settling on the details of the regime as applying to those sectors.