ATO Interpretative Decision
ATO ID 2004/715 (Withdrawn)
Income Tax
Non Commercial Losses: other assets test - 'similar rights'FOI status: may be released
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This ATO ID is withdrawn as it is a straightforward application of the law.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are statutory licences, academic qualifications and courses 'similar rights' to 'trademarks, patents and copyrights' within the meaning of Item 4 of the other assets test in section 35-45 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. Statutory licences, academic qualifications and courses are not 'similar rights' to 'trademarks, patents and copyrights' within the meaning of Item 4 of the other assets test in section 35-45 of the ITAA 1997.
Facts
An individual taxpayer carried on a viticultural business activity during the 2001-03 income years.
The taxpayer acquired water licences, academic qualifications and attended courses in a previous year. These assets were used on a continuing basis in carrying on the viticultural business activity in the 2001-03 income years. The taxpayer assigned values to the academic qualifications and courses.
Reasons for Decision
The value of certain assets can be included for the purposes of the other assets test in section 35-45 of the ITAA 1997. These values are set out in the table in subsection 35-45(2) of the ITAA 1997. They are:
Item 1. An asset whose decline in value you can deduct under Division 40;
Item 2. An item of trading stock;
Item 3. An asset that you lease from another entity;
Item 4. Trademarks, patents, copyrights and similar rights.
Assets specifically excluded from being counted for this test are assets or interests in real property that are taken into account for that year under the real property test (section 35-40 of the ITAA 1997) and cars, motor cycles and similar vehicles (subsection 35-45(4) of the ITAA 1997).
Item 4 specifically includes 'trademarks, patents and copyrights', it also includes rights that are similar to these assets. The scope of the rights that are included as being similar is determined by the context in which the word 'similar' appears.
'Intellectual property' is defined in Osborn's Concise Law Dictionary (ninth edition) as:
An all-embracing term covering copyright (q.v.), patents (q.v.), trade marks (q.v.) and analogous rights found on confidence and passing off (q.v.). The term describes those rights which protect the product of one person's work by hand or brain against unauthorised used or exploitation by another...
The rights preceding 'and similar rights' at Item 4 are entirely of the genre of intellectual property rights. In this context, 'similar rights' as the term is used at Item 4 refers to any rights which protect the product of one person's work by hand or brain against unauthorised use or exploitation by another.
In this case, the taxpayer's water licences, academic qualifications and courses are not rights protecting the product of a person's work by hand or brain against unauthorised use or exploitation by another. Therefore the water licences, academic qualifications and course assets are not considered to be similar rights to trademarks, patents and copyrights for the purposes of Item 4 of the other assets test in subsection 35-45(2) of the ITAA 1997. Their values cannot be included for the purposes of the other assets test.
Date of decision: 23 July 2004Year of income: Year ended 30 June 2001 Year ended 30 June 2002 Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
section 35-10
section 35-45
subsection 35-45(2)
subsection 35-45(4)
Related Public Rulings (including Determinations)
Taxation Ruling TR 2001/14
Taxation Ruling TR 2001/14A - Addendum
ATO ID 2003/1005
ATO ID 2004/11
ATO ID 2004/506
Other References:
Osborn's Concise Law Dictionary (ninth edition)
Keywords
NCL other assets test
Non commercial losses
ISSN: 1445-2782
| Date: | Version: | |
| 23 July 2004 | Original statement | |
| You are here | 30 July 2010 | Archived |
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