Silicon Valley, Singapore, Tel Aviv, London, Los Angeles…next up…hubs in Australia?
Budget21 introduces the patent box scheme designed to encourage medical and biotechnology investment by offering a concessional tax rate (17%) on income generated off patents to companies who register those patents in Australia (Patent Box Regime).
What does this mean? As financial rewards are directly improved through the Patent Box Regime, the already strong innovative tech driven pathways in the eastern States should accelerate. The level of investment in the sector in Western Australia which was already on the increase as investors seek to diversify away from traditional resources has hopefully been given a boost.
But will the Patent Box Regime bring research and development onto Australian shores? Arguably no if you look to similar schemes in other countries, it will simply drive prioritisation of patent registration within Australia when those patents are ready – and for many companies that is some time away yet. Potentially on a see-through basis it simply asks the taxpayer to fund tech companies. However, before criticise the new Patent Box Regime, we need to bear in mind a few key points. The Patent Box Regime comfortably sits alongside the Research and Development Tax Incentive scheme (which requires development and research onshore), theoretically local innovation through research and development onshore is rewarded (though this will ultimately depend on the drafting – and the devil is always in the detail) and lastly it places Australia on a more competitive footing in the international market. That’s surely a step in the right direction for Australia.