Close this search box.
BIS Cosgrove Accountants Gold Coast & Brisbane

The Tax System and Your Intellectual Property: Understanding IP Assets

When you think of taxes and deductions, you probably think of tangible goods and services. With an ever-changing modern world that’s focused on technology, there is a bigger emphasis on the value of intellectual property. Naturally, the government has caught wind of this trend and has found ways to incorporate it into the tax system.

What is Intellectual Property?

Intellectual property can come in many forms. It is best described as an intangible asset that is related to business. It’s something that you can financially benefit from but is not a solid object you can hold. Assets that fall under intellectual property include:

  • Trademarks
  • Copyrights
  • Patents
  • Designs
  • Manufacturing processes
  • Formulas

The purpose of intellectual property laws is to protect businesses that develop an original intellectual property while encouraging innovation. When you create a patent, design, or process, it can give you an advantage in your market. Intellectual property ensures that no one can take your hard work and use it to profit without your consent.

Intellectual Property and Taxes

Tax law views intellectual property as a depreciating asset. The Australian Tax Office outlines this type of asset as one that “consists of the rights that an entity has under a Commonwealth law” as the:

  • Patentee or licensee of a patent
  • Owner or licensee of a registered design
  • Owner or licensee of a copyright

Some assets are viewed differently and are subject to different rules when it comes to income taxes.

Intellectual Property Changes

The government rules about intellectual property changed back in 2016. As of July of last year, companies can:

  • Perform a self-assessment to determine tax effective life of intangible assets based on the tax treatment of the asset and actual number of years it was economically beneficial
  • Choose to use existing statutory effective life for intangible asset depreciation

Know Your Intellectual Property Tax Laws

It can be difficult to determine how to handle your intellectual property, so you stay in line with tax laws. For example, many taxpayers overlook their website, which may be considered a form of intellectual property.

The best way to get answers to your intellectual property questions is with the guidance of an expert. We provide expert advice and solutions so you can determine what intellectual property you own and what can be applied to this year’s taxes. Get in touch with us here or give the office a call on 07 5598 3800.

The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.