Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Specific rules for expenditure types

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

You could also call this:

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

You can get a deduction when you sell a patent application with a complete specification or patent rights that you bought on or after 1 April 1993.

The amount you can deduct is worked out using a simple sum. You take the total cost of the patent application or rights and subtract the total amount of depreciation loss you’ve already claimed for them.

The total cost doesn’t include any money you’ve already claimed as a deduction under section DZ 15 for patent applications before 1 April 2005.

This deduction is allowed even if it’s for a capital expense, but you still need to meet the general permission rule and other general limitations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513680.

Topics:

Money and consumer rights > Taxes

Business > Intellectual property

DB 39: Patent rights acquired before 1 April 1993, or

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

DB 40BA: Expenses in application for plant variety rights, or

“Tax deductions for unsuccessful plant variety rights applications”

Part D Deductions
Specific rules for expenditure types

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

This section applies when a person disposes of a patent application with a complete specification or patent rights that they acquired on or after 1 April 1993.
The person is allowed a deduction on the disposal of the patent application with a complete specification or patent rights.
The amount is calculated using the formula—
$total cost − total amounts of depreciation loss.$

Where:
In the formula,—
total cost is the total cost to the person of the patent application with a complete specification or of the patent rights, excluding any expenditure for which the person has been allowed a deduction under section DZ 15 (Patent applications before 1 April 2005):
total amounts of depreciation loss is the total of the amounts of depreciation loss, for which the person is allowed a deduction, for the patent application with a complete specification or for the patent rights and the patent application relating to the patent rights.

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 31

Notes

Section DB 40(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 40(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).