Michael Sukkar (Deakin, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill fulfills the government's 2021-22 budget announcement to introduce a patent box tax concession for medical and biotechnology innovations.

Australia already has a research and development tax incentive to support industries to undertake R&D in Australia. The patent box adds a tax incentive for businesses with successful R&D to commercialise Australian developed R&D here in Australia, supporting jobs, investment and a stronger economy.

Where the taxpayer meets the eligibility criteria for the patent box regime, income directly attributable to the eligible patent will benefit from being subject to an effective income tax rate of 17 per cent, to the extent that the taxpayer undertakes the R&D for that patent in Australia. The patent box will apply from 1 July 2022.

This is just another example of the Morrison government cutting taxes on investment in Australia. By taxing income from patented innovations at an internationally competitive rate, the patent box will reduce IP offshoring and make Australia a more attractive location for R&D.

Australia will join over 20 jurisdictions who currently have patent boxes, including the UK and France. The Australian patent box will be limited to the medical and biotech sector. This sector has significant Australian based R&D and we're confident will be particularly responsive to this incentive.

Australia's patent box regime has been designed consistent with the OECD's requirements for concessional tax regimes for intellectual property regimes to ensure that the patent box meets internationally accepted standards.

The government has consulted widely in developing this patent box. Since the 2021-22 budget announcement, the government has incorporated changes to the bill recognising the long lead times between application and granting of patents as well as commercial decisions around which jurisdictions to patent in. However, even where patents are filed in other jurisdictions, they must be owned in Australia and the underlying R&D must have occurred in Australia to benefit from the patent box.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.