Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Recharacterisation of certain transactions - Transfers of relationship property

FB 8: Patent applications and patent rights

You could also call this:

“Handling patents when couples split property”

When a couple who are separating decide how to split their property, they might need to deal with patent applications or patent rights. This section of the law explains how to handle these special items.

If you transfer a patent application or patent right when you’re splitting up property in a relationship, the law treats it as if you’ve sold it. The amount of the “sale” is based on how much money was spent on it.

There are two ways to figure out the amount:

  1. It could be the money spent on creating the invention, which you couldn’t claim as a tax deduction before.

  2. Or it could be the cost of buying the patent application or rights before 1 April 1993, which you also couldn’t claim as a tax deduction.

This rule helps to work out any tax that might need to be paid when you transfer the patent as part of your property settlement.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516343.

Topics:
Money and consumer rights > Taxes
Family and relationships > Marriage and partnerships
Business > Intellectual property
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Part F Recharacterisation of certain transactions
Transfers of relationship property

FB 8Patent applications and patent rights

  1. This section applies for the purposes of sections CB 30 and DB 38 to DB 40 (which relate to patent applications and patent rights) when a patent application with complete specifications or a patent right is transferred on a settlement of relationship property.

  2. The transfer is treated as a disposal and acquisition for an amount that equals, as applicable,—

  3. expenditure referred to in section DB 38 (Patent rights: devising patented inventions) for which the transferor is denied a deduction; or
    1. the cost of the applications or rights referred to in section DB 39 (Patent rights acquired before 1 April 1993) for which the transferor is denied a deduction.

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