Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 37: Expenses in application for patent or design registration

You could also call this:

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

If you spend money trying to get a patent or design registration but don’t succeed, you can get some of that money back as a tax deduction. This applies if you don’t submit your application, if you withdraw it, or if it’s refused.

You can claim a deduction for the money you spent on the application if it would have been part of the cost of fixed life intangible property or if you could have claimed it as a deduction if your application had been successful. However, you can only claim this deduction if you can’t claim it under any other part of the tax law.

You can claim this deduction in the tax year when you decide not to submit your application, when you withdraw it, or when it’s refused.

This rule overrides the general rule that you can’t deduct capital expenses. However, you still need to follow the general permission and other general limitations in the tax law.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513672.

Topics:
Money and consumer rights > Taxes
Business > Intellectual property
Previous

DB 36: Patent expenses, or

“Deducting costs for patents bought before 23 September 1997”

Next

DB 38: Patent rights: devising patented inventions, or

“Getting money back for inventing and selling patents”

Part D Deductions
Specific rules for expenditure types

DB 37Expenses in application for patent or design registration

  1. A person who incurs expenditure for the purpose of applying for the grant of a patent or of a design registration and does not obtain the grant because the application is not lodged or is withdrawn, or because the grant is refused, is allowed a deduction for the expenditure—

  2. that the person incurs in relation to the application or intended application; and
    1. that would have been part of the cost of fixed life intangible property, or otherwise a deduction, if the application or intended application had been granted; and
      1. for which the person is not allowed a deduction under another provision.

        1. The deduction is allocated to the income year in which the person decides not to lodge the application, withdraws the application, or is refused the grant.

        2. This section overrides the capital limitation. The general permission and other general limitations still apply.

        Compare
        Notes
        • Section DB 37 heading: replaced (with effect on 1 April 2015), on , by section 98(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
        • Section DB 37(1): replaced (with effect on 1 April 2014 and applying for the 2014–15 and later income years), on , by section 47(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
        • Section DB 37(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 98(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
        • Section DB 37(2): replaced (with effect on 1 April 2014 and applying for the 2014–15 and later income years), on , by section 47(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
        • Section DB 37 list of defined terms design registration: inserted (with effect on 1 April 2015), on , by section 98(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).