Beth Webster Australia’s new treasurer Jim Chalmers says his biggest priorities includeboosting productivity and business investment. If so, he would be wise not to follow in the footsteps of his predecessor Josh Frydenberg, who tried for more than a year to introduce Australia’s first so-called Patent Box before the legislation lapsed ahead of the election without a vote. First introduced in Ireland in the early 1970s, and adopted later in countries such as France, Spain, China and the United Kingdom, patent boxes are said to get their name from a box on the tax form that companies tick if they have income deriving from intellectual property, which is taxed at a discounted rate. The theory is that if such income is taxed less, international corporations will do more of their research and development in Australia. 1 When announced in the 2021 budget, the discount was to be limited to income from patents on medical and biological technologies, although (also before the bill became law) the 2022 budget announced plans to extend it to agricultural and low emission technologies. Income derived directly from patents in these fields was to be taxed at just 17%, instead of the prevailing company tax rate of 30%. Doubts ahead of time Doubts were expressed ahead of time. In 2015 the industry department’s office of the chief economist said while a patent box tax break would certainly increase the number of patent applications filed, most of the extra ones were “likely to be opportunistic” (filed on inventions that would have taken place without patents). Any extra patent fees collected were unlikely to offset the tax lost. And the advice had a broader point. Rewarding investors well after risky research had been undertaken was unlikely to do much to encourage such research. Research and development tax credits, on the other hand, provide tax breaks at time the research is being funded, according to one Australian study, creating A$1.90 of research for each dollar of tax lost. Supporters of the concept point t