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Reports of Government Considering Tax Incentives for Commercialisation of IP

The AFR has reported in articles this week that the government may consider incentives for the commercialisation of IP. This follows comments by Treasurer Josh Frydenberg who mentioned he would take a “close look” at the patent box tax incentive offered to companies in the UK whereby companies receive a lower tax rate on profits from intellectual property.

Comments from technology sector industry leaders seemed to welcome the development around IP incentives, however, have noted that any introduction of an IP commercialisation incentive should not be at the expense of the R&D Tax Incentive.

This discussion also occurs at a time when the recent federal budget has projected the cost of the R&D Tax Incentive to materially decrease and the government will need to decide whether, or in what form to reintroduce the government’s proposed reforms to the R&D Tax Incentive  (Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018 ).

Following a review by a Senate Economics Committee including members from all sides of politics, the committee recommended that the R&D Tax reform bill be deferred from consideration until further analysis of the impact is undertaken, particularly with respect to the proposed intensity threshold and refundable offset cap.