Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 36: Patent expenses

You could also call this:

“Deducting costs for patents bought before 23 September 1997”

You can deduct money you spend on getting, keeping, or extending a patent if you meet two conditions. First, you must have bought the patent before 23 September 1997. Second, you need to use the patent to make money in the same year you spend the money on it.

This rule lets you deduct these costs even if they’re usually seen as capital expenses. However, you still need to follow the general permission rule and other general limitations.

When we talk about the general permission rule, we mean the main rule that says when you can deduct expenses. The general limitations are other rules that might stop you from making deductions.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513670.

Topics:
Money and consumer rights > Taxes
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DB 35: Some definitions, or

“Definitions for research and development tax rules”

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DB 37: Expenses in application for patent or design registration, or

“You can claim tax deductions for unsuccessful patent or design registration applications”

Part D Deductions
Specific rules for expenditure types

DB 36Patent expenses

  1. A person is allowed a deduction for expenditure that they incur in connection with the grant, maintenance, or extension of a patent if they—

  2. acquired the patent before 23 September 1997; and
    1. use the patent in deriving income in the income year in which they incur the expenditure.

      1. This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

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