Key News Summary:   On 5.12.18, the Senate passed the Treasury Laws Amendment (2017 Enterprise Incentives No 1) Bill 2017  with a Government amendment that would remove the schedule, under which taxpayers would have been able, to to self-assess the ‘effective life’, of in-house software and various intellectual property assets, held from 1 July 2016. This affects the rate at which the taxpayer can claim depreciation deductions.

The Bill will have to return to the House of Representatives, to have these amendments passed).

The removed Schedule covered the following assets (that could have been depreciated more quickly) were:

  • a standard patent;
  • an innovation patent;
  • a petty patent;
  • a registered design;
  • a copyright (except copyright in film);
  • a licence (except one relating to a copyright or in house software);
  • a licence relating to a copyright (except copyright in a film);
  • in-house software;
  • a spectrum licence;
  • a datacasting transmitter licence; and
  • a telecommunications site access right.

The Schedule that remains proposes to:

  • supplement the “same business test” with a “similar business test” for the purposes of working out whether a company’s tax losses and net capital losses from previous income years can be used as a tax deduction in a current income year.

This Bill has had a long history, being originally introduced in March 2017, introduced in the Senate in June 2017, and did not have the amendments passed, in the Senate, until December 2018 (one and a half years later). And the Bill is still not passed.

[APH website: Bill Tracker, EM to original Bill (explaining removed Schedule 2, Chapter 2, p27); Supplementary EM (explaining amendment); LTN 235, 5.12.18; Tax Month – December 2018]

FJM 8.1.19

CPD (comprehension) questions

  1. Did the removed schedule cover the assets, for which that taxpayers would have been able to ‘self-assess’ effective lives, for depreciation purposes?
  2. What was this designed to achieve?
  3. What would the remaining schedule amend, and how?
  4. Was ‘in-house software’ included in the removed schedule (that could have been depreciated quicker)?
  5. What types of patents were included in the removed schedule?
  6. What was the exclusion from copyright that could have been depreciated on a self-assessed basis?
  7. Were Spectrum and data transmission licences included in the removed schedule?

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