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AI and tax policy in Australia: a ‘whole-of-life’ approach to incentivising AI research and innovation


In the global knowledge economy, AI’s early adoption phase is nearly over and the race for AI dominance is in full swing. The implication for the Australian economy is that it is no longer enough for Australian firms to simply adopt AI technologies across and throughout their business activities. Competitive advantage can only be achieved and maintained if Australian firms design, develop and commercialise knowledge-producing AI themselves and use that same AI to create new goods, services and business models. Accordingly, this article proposes a ‘whole-oflife’ approach to incentivising private sector investment in AI research and innovation. This approach comprises introducing an AI tax offset to do for AI what the R&D Tax Incentive does for ‘scientific’ research and what the Digital Games Tax Offset will do for gaming software. The scope of the new Patent Box should also be broadened to include AI. Plus, an alternative to the Patent Box — an AI Box — should be introduced for firms that choose to commercialise their AI ‘trade secrets’ instead of using patents.

Author profile

Mark Bowler-Smith
Mark is a Senior Lecturer in Tax Law, University of Auckland.
Current 1 December 2015
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