Commonwealth of Australia Bills Commonwealth of Australia Bills[Index] [Search] [Download] [Related Items] [Help]
This is a Bill, not an Act. For current law, see the Acts databases.
2019-2020-2021-2022
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Treasury Laws Amendment (Tax
Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
(Treasury)
A Bill for an Act to amend the law relating to
taxation, and for related purposes
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
i
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedules ........................................................................................... 2
Schedule 1--Patent box
3
Part 1--Main amendments
3
Income Tax Assessment Act 1997
3
Part 2--Other amendments
12
Income Tax Assessment Act 1997
12
Part 3--Application and transitional provisions
13
Income Tax (Transitional Provisions) Act 1997
13
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
1
A Bill for an Act to amend the law relating to
1
taxation, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act is the
Treasury Laws Amendment (Tax Concession for
5
Australian Medical Innovations) Act 2022
.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedules
7
Legislation that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
Patent box
Schedule 1
Main amendments
Part 1
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
3
Schedule 1--Patent box
1
Part 1--Main amendments
2
Income Tax Assessment Act 1997
3
1 After Division 355
4
Insert:
5
Division 357--Patent box
6
Table of Subdivisions
7
Guide to Division 357
8
357-A Object and basic concepts
9
357-B Patent box income rules
10
357-C Other matters
11
Guide to Division 357
12
357-1 What this Division is about
13
This Division applies to R&D entities that make an election under
14
this Division, and to certain patents linked to therapeutic goods
15
included in the Australian Register of Therapeutic Goods. It
16
defines certain income streams in respect of such patents to be
17
patent box income streams
.
18
Assessable income of an R&D entity that arises from a patent box
19
income stream can be, to an extent, non-assessable non-exempt
20
income.
21
Subdivision 357-A--Object and basic concepts
22
Table of sections
23
Operative provisions
24
Schedule 1
Patent box
Part 1
Main amendments
4
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
357-5
Object of Division
1
357-10
R&D entities covered by this Division
2
357-15
Patents covered by this Division
3
Operative provisions
4
357-5 Object of Division
5
The object of this Division is to encourage innovation and
6
commercialisation of patented inventions in the medical and
7
biotechnology industries to be undertaken in Australia by taxing
8
income derived from those patented inventions concessionally.
9
357-10 R&D entities covered by this Division
10
(1) This Division covers an
*
R&D entity if it makes an election in
11
accordance with subsection (2).
12
(2) An
*
R&D entity makes an election in accordance with this
13
subsection if:
14
(a) it makes the election in the
*
approved form; and
15
(b) it gives the election to the Commissioner.
16
(3) An election under subsection (2) cannot be revoked.
17
(4) An election under subsection (2) has effect in relation to an income
18
year (the
election year
), and all later income years, if the
*
R&D
19
entity made the election in accordance with that subsection before
20
or at the time at which the R&D entity was required to lodge its
21
*
income tax return for the election year.
22
357-15 Patents covered by this Division
23
(1) This Division covers a patent if:
24
(a) it is:
25
(i) a standard patent granted by the Commissioner of
26
Patents under section 61 of the
Patents Act 1990
; or
27
(ii) a United States Utility Patent issued by the United
28
States Patent and Trademark Office; or
29
(iii) a European patent granted under the
*
EPC; and
30
Patent box
Schedule 1
Main amendments
Part 1
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
5
(b) either of the following is in substance disclosed in the
1
complete specification of the patent and in substance falls
2
within the scope of the claim or claims of that specification:
3
(i) a pharmaceutical substance (within the meaning of the
4
Patents Act 1990
);
5
(ii) an invention (within the meaning of that Act); and
6
(c) if subparagraph (b)(i) applies--a
*
therapeutic good covered
7
by this Division contains, or consists of, the pharmaceutical
8
substance; and
9
(d) if subparagraph (b)(ii) applies--a therapeutic good covered
10
by this Division incorporates the invention.
11
(2) The
*
therapeutic good mentioned in paragraph (1)(c) or (d) is
12
linked
to the patent mentioned in subsection (1).
13
(3)
EPC
means the Convention on the Grant of European Patents
14
(European Patent Convention) of 5 October 1973, as that treaty is
15
in force from time to time.
16
(4) To avoid doubt, for the purposes of this Division, determine
17
whether an R&D entity
*
holds a patent in accordance with
18
section 40-40.
19
357-20 Therapeutic goods covered by this Division
20
This Division covers a
*
therapeutic good if it is included in a part
21
of the Australian Register of Therapeutic Goods (maintained under
22
section 9A of the
Therapeutic Goods Act 1989
) mentioned in
23
subsection 9A(3) of that Act.
24
Subdivision 357-B--Patent box income rules
25
Table of sections
26
Operative provisions
27
357-25
Treatment of income from patent box income stream as NANE income
28
357-30
Meaning of
R&D fraction
29
Schedule 1
Patent box
Part 1
Main amendments
6
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
Operative provisions
1
357-25 Treatment of income from patent box income stream as
2
NANE income
3
(1) An amount (the
original amount
) that:
4
(a) arises from a
*
patent box income stream of an
*
R&D entity
5
covered by this Division; and
6
(b) is included (disregarding this section) in the R&D entity's
7
assessable income for an income year covered by
8
subsection (2); and
9
(c) is included (disregarding this section) in that assessable
10
income otherwise than because of the operation of:
11
(i) Division 815; or
12
(ii) Part IVA of the
Income Tax Assessment Act 1936
;
13
is not assessable income and is not
*
exempt income to the extent
14
that it does not exceed the amount worked out as follows:
15
Method statement
16
Step 1. Identify all patents covered by this Division that underlie
17
the
*
patent box income stream (see subsection (5)).
18
Step 2. Work out the extent of the original amount that is
19
attributable to those patents, worked out as a reasonable
20
apportionment of the original amount (see
21
subsection (6)).
22
Step 3. Multiply the result of step 2 by the
*
R&D fraction for the
23
income year for the patent box income stream (see
24
section 357-30).
25
Step 4. Multiply the result of step 3 by the
*
patent box NANE
26
fraction (see subsection (7)).
27
Note:
This subsection does not create a specific form of statutory income.
28
(2) This subsection covers an income year if the
*
R&D entity's
29
election under subsection 357-10(2) has effect in relation to the
30
income year (see subsection 357-10(4)).
31
Patent box
Schedule 1
Main amendments
Part 1
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
7
Patent box income stream
1
(3) Each of the following is a
patent box income stream
of an
*
R&D
2
entity:
3
(a) the sale of or dealing with a
*
therapeutic good covered by
4
this Division
*
linked to one or more patents covered by this
5
Division that are
*
held
by the R&D entity;
6
(b)
*
royalties or licence fees payable to the R&D entity because
7
the R&D entity granted a right to exploit a patented invention
8
in respect of a patent covered by this Division that is held by
9
the R&D entity;
10
(c) a
*
balancing adjustment event for a patent covered by this
11
Division that is held by the R&D entity;
12
(d) damages or compensation payable to the R&D entity in
13
respect of a patent covered by this Division that is held by the
14
R&D entity.
15
Milestone payments
16
(4) For the purposes of this section:
17
(a) an amount may arise from a
*
patent box income stream
18
mentioned in paragraph (3)(a) even if it arises before the sale
19
or dealing mentioned in that paragraph; and
20
(b) an amount may arise from a patent box income stream
21
mentioned in paragraph (3)(b) even if it arises before the
22
grant of the right mentioned in that paragraph.
23
Patents that underlie patent box income stream
24
(5) A patent
underlies
a
*
patent box income stream mentioned in a
25
paragraph of subsection (3) if the patent is mentioned in that
26
paragraph.
27
Extent to which original amount is attributable to patents
28
(6) For the purposes of step 2 in subsection (1), work out the
29
apportionment of the original amount so as best to achieve
30
consistency with:
31
(a) unless paragraph (b) applies--the documents covered by
32
section 815-135; or
33
Schedule 1
Patent box
Part 1
Main amendments
8
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
(b) if the R&D entity is a body corporate mentioned in
1
subsection 355-35(2) (foreign body corporate with Australian
2
permanent establishment)--the documents covered by
3
section 815-235.
4
Patent box NANE fraction
5
(7) The
patent box NANE
fraction
is worked out under the formula:
6
(
)
*
*
R&D entity's corporate tax rate expressed as a percentage
17%
1 -
7
Other matters
8
(8) For the purposes of subsection (1), disregard an amount included in
9
the
*
R&D entity's assessable income for an income year to the
10
extent that the amount is reflected in an amount included in the
11
R&D entity's assessable income for any income year under
12
section 355-450 (clawback for recoupments etc).
13
357-30 Meaning of R&D fraction
14
(1) The
R&D fraction
for an income year for a
*
patent box income
15
stream of an
*
R&D entity covered by this Division is worked out
16
under the formula:
17
A
1.3
A
B
C
+
+
18
where:
19
A
is the sum of the following:
20
(a) the total of the amounts that the R&D entity can deduct for
21
the income year and previous income years under
22
paragraph 355-100(1)(a) or (d) in respect of the patents
23
covered by this Division that
*
underlie the
*
patent box
24
income stream;
25
(b) the total of the
*
cost (within the meaning of
26
Subdivision 40-C)
of each asset in respect of which the R&D
27
entity can deduct an amount for the income year or a
28
Patent box
Schedule 1
Main amendments
Part 1
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
9
previous income year under paragraph 355-100(1)(b) or (e)
1
in respect of the patents mentioned in paragraph (a).
2
B
is the total expenditure, incurred in respect of the income year or
3
a previous income year by the
*
R&D entity, that satisfies these
4
conditions:
5
(a) the expenditure is in respect of the patents covered by this
6
Division that
*
underlie the
*
patent box income stream;
7
(b) the expenditure is on one or more
*
R&D activities, each of
8
which is conducted outside of Australia for the R&D entity
9
by one or more
*
associates of the R&D entity.
10
C
is:
11
(a) the total of the
*
cost (within the meaning of
12
Subdivision 40-C) of each asset in respect of which the
13
*
R&D entity can deduct an amount under Division 40 for a
14
decline in value for the income year or a previous income
15
year in respect of the patents covered by this Division that
16
*
underlie the
*
patent box income stream;
17
other than:
18
(b) costs that are attributable to commercial, legal or
19
administrative aspects of patenting, to the extent that those
20
costs relate to patents mentioned in paragraph (a) that have
21
resulted from the R&D entity's
*
R&D activities for which it
22
is registered as mentioned in subparagraph 355-205(1)(a)(i).
23
(2) To avoid doubt, for the purposes of paragraph (a) of the definition
24
of
A
in subsection (1), disregard subsections 355-100(1A), (2) and
25
(3).
26
(3) For the purposes of the definition of
A
in subsection (1), disregard
27
amounts of expenditure incurred by the
*
R&D entity on
*
R&D
28
activities that are conducted outside of Australia for the R&D
29
entity by one or more
*
associates of the R&D entity (regardless of
30
whether the activities are covered by a finding in force under
31
paragraph 28C(1)(a) of the
Industry Research and Development
32
Act 1986
).
33
(4) For the purposes of the definition of
C
in subsection (1), in
34
working out the
*
cost of an asset
*
held by the
*
R&D entity, treat
35
the first element of that cost as being the asset's
*
market value
36
Schedule 1
Patent box
Part 1
Main amendments
10
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
when the entity first started to hold it, if the entity started to hold
1
the asset under an
*
arrangement and:
2
(a) there was at least one other party to the arrangement with
3
whom the entity did not deal at
*
arm's length; and
4
(b) apart from this section, the first element of the asset's cost
5
would fall short of its market value.
6
Note:
In a case where the first element of the asset's cost would
exceed
its
7
*
market value, see item 8 of the table in subsection 40-180(2).
8
(5) Subsection (4) does not apply if the first element of that cost is
9
worked out under section 40-205 (Cost of a split depreciating
10
asset).
11
(6) Despite subsection (1), if the amount worked out under the formula
12
in that
subsection exceeds one, the
R&D fraction
for the
*
patent
13
box income stream of the
*
R&D entity is one.
14
Subdivision 357-C--Other matters
15
Table of sections
16
Operative provisions
17
357-35
Amendment of assessments
18
Operative provisions
19
357-35 Amendment of assessments
20
Section 170 of the
Income Tax Assessment Act 1936
does not
21
prevent the amendment of an assessment of an
*
R&D entity
22
covered by this Division for an income year (the
amendment year
)
23
if:
24
(a) either:
25
(i) an amount that arises from a
*
patent box income stream
26
of the R&D entity is included in the entity's assessable
27
income for the amendment year (disregarding section
28
357-25); or
29
(ii) the R&D entity is entitled to a deduction for the
30
amendment year in relation to an amount that arises
31
from a patent box income stream and is included in the
32
Patent box
Schedule 1
Main amendments
Part 1
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
11
entity's assessable income for the amendment year or
1
another income year (disregarding section 357-25); and
2
(b) after the end of the amendment year:
3
(i) a patent covered by this Division that
*
underlies the
4
patent box income stream was granted or issued; or
5
(ii) a
*
therapeutic good became a therapeutic good covered
6
by this Division
*
linked to a patent covered by this
7
Division that underlies the patent box income stream;
8
and
9
(c) the purpose of the amendment is to alter the taxable income
10
of the R&D entity for the amendment year, as a result of a
11
circumstance mentioned in paragraph (b); and
12
(d) the amendment is made at any time during the period of 4
13
years starting immediately after the latest of the following:
14
(i) the day on which the patent was granted or issued;
15
(ii) the day on which the therapeutic good became a
16
therapeutic good covered by this Division.
17
Note:
Section 170 of the
Income Tax Assessment Act 1936
specifies the
18
periods within which assessments may be amended.
19
20
Schedule 1
Patent box
Part 2
Other amendments
12
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
No. , 2022
Part 2--Other amendments
1
Income Tax Assessment Act 1997
2
2 Section 11-
55 (after table item headed "offshore banking
3
units")
4
Insert:
5
6
patent box
income from patent box income stream .............................. 357-25(1)
3 Subsection 715-660(1) (after table item 1)
7
Insert:
8
9
1A
subsection 357-10(2)
Choice to become an
*
R&D entity covered by
Division 357 (Patent box)
4 Subsection 995-1(1)
10
Insert:
11
EPC
has the meaning given by subsection 357-15(3).
12
linked
: a
*
therapeutic good covered by this Division is
linked
to a
13
patent in the circumstances set out in subsection 357-15(2).
14
patent box income stream
has the meaning given by
15
subsection 357-25(3).
16
patent box NANE
fraction
has the meaning given by
17
subsection 357-25(7).
18
R&D fraction
has the meaning given by section 357-30.
19
therapeutic goods
has the same meaning as in the
Therapeutic
20
Goods Act 1989
.
21
underlie
: a patent
underlies
a
*
patent box income stream in the
22
circumstances set out in subsection 357-25(5).
23
Patent box
Schedule 1
Application and transitional provisions
Part 3
No. , 2022
Treasury Laws Amendment (Tax Concession for Australian Medical
Innovations) Bill 2022
13
Part 3--Application and transitional provisions
1
Income Tax (Transitional Provisions) Act 1997
2
5 After Division 355
3
Add:
4
Division 357--Patent box
5
Table of sections
6
357-1
Application of Division 357 of the
Income Tax Assessment Act 1997
7
357-1 Application of Division 357 of the Income Tax Assessment Act
8
1997
9
Division 357 of the
Income Tax Assessment Act 1997
applies to patents
10
granted or issued after 11 May 2021, in respect of income years starting
11
on or after 1 July 2022.
12