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New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 39: Patent rights acquired before 1 April 1993

You could also call this:

“Tax deduction for selling patent rights obtained before April 1993”

If you got patent rights before 1 April 1993 and you sell them, you can get some money back as a tax deduction. The amount you can deduct depends on how long you had the patent rights.

To work out how much you can deduct, you use a special maths formula. You look at how long the patent rights had left when you sold them, compared to how long they had left when you first got them. You then multiply this by how much the patent rights cost you.

This deduction is allowed even if the patent rights are a capital asset. You still need to meet the general rules for deductions, but you don’t have to worry about the usual limits on deducting capital expenses.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513676.

Topics:

Money and consumer rights > Taxes

DB 38: Patent rights: devising patented inventions, or

“Getting money back for inventing and selling patents”

DB 40: Patent applications or patent rights acquired on or after 1 April 1993, or

“Deductions for selling patents or rights acquired since April 1993”

Part D Deductions
Specific rules for expenditure types

DB 39Patent rights acquired before 1 April 1993

This section applies when a person disposes of patent rights that they acquired before 1 April 1993.
The person is allowed a deduction on the disposal of the patent rights.
The amount is calculated using the formula—
$(unexpired term of the patent rights at the date of disposal÷ unexpired term of the patent rights at the date of acquisition) × cost$

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

Compare

2004 No 35 s DB 30

Notes

Section DB 39(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section DB 39(2): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section DB 39(3) formula: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).