Providing the eligibility criteria are met and subject to legislation, any income derived from the exploitation of an eligible patent would be taxed at an effective income tax rate of 17% (down from 25% for SMEs and 30% for large businesses).[1]
To be eligible to claim the tax concession, you must be
- an R&D entity for the purposes of the R&D Tax Incentive (link here); and
- the legal owner of an eligible patent or PBR.
In addition, the research and development underlying the patent or PBR must have been done in Australia and the invention must have been exploited by the owner in Australia.
Eligible patents or PBRs must have been granted by the Australian Intellectual Property Office, the United States Patent & Trademarks Office, or the European Patent Office. Eligible patents or PBRs include:
- A medical or biotechnology patent linked to a therapeutic good that is included in the Australian Register of Therapeutic Goods; or
- A patent linked to an agricultural and veterinary (agvet) chemical product listed on either the Australian Pesticides and Veterinary Medicines Authority (APVMA) or PubCRIS (Public Chemical Registration Information System) register; or
- A patent related to low emissions technology as set out in the 140 technology areas listed in the Australian Government’s 2020 Technology and Investment Roadmap Discussion Paper, or included as priority technologies in the Government’s 2021 and future annual Low Emissions Technology Statements; or
- A PBR registered after 29 March 2022.
[1] Subject to legislation, the tax concession applicable to the exploitation of a medical or biotechnology patent will apply to income earned after 1 July 2022, where the patent was granted or issued after 11 May 2021. In respect of an agricultural patent, a low emissions technology patent or a Plant Breeder’s Right, the tax concession would apply to income earned after 1 July 2023, where the patent was granted or issued after 29 March 2022