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Potential deductions arising from creating or exploiting intellectual property


The purpose of this article is to explore different ways in which taxpayers can obtain tax relief for expenditure incurred in either creating or exploiting intellectual property (“IP”). The discussion concentrates on taxpayers who create or exploit IP for use within their own businesses, or in the course of providing services to their customers, rather than for the purpose of disposing of it. The article first examines general deductibility of IP expenditure, and then reviews other opportunities for tax relief, including the capital allowance provisions, where the general deduction is not available.

The article also discusses the possibility of tax relief under the various special concessions and incentives for research and development activities, and film and television production expenditure. Finally, the article briefly reviews the position under the tax consolidations regime, and the implications under that regime where part of the acquisition cost of a subsidiary relates to items of IP.

Author profile

Kate Walters
Kate is an Executive Director with Ernst & Young's Sydney Tax Practice. She has extensive experience advising both international and local organisations regarding their operations. She has particular experience with multinational organisations and the issues arising for both offshore parent and local subsidiaries regarding the creation distribution and exploitation of copyrighted content in the Australian market. - Current at 17 November 2011
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