More crazy “innovation” tax changes…

The Government has released the next draft bill on the changes to the tax system to encourage innovation.

This draft bill will allow taxpayers the choice to either self‑assess the effective life of certain intangible depreciating assets or use the statutory effective life. The current law only provides an effective life set by statute.

If you are even slightly interested in this change, here is what I wrote as a part of the consultation…

Hi,

Thanks for all your efforts in this draft law.
I understand that this proposal is “designed to incentivise and reward innovation”.

How does giving a telecommunications company the ability to self assess the effective life of a telecommunications site access right “incentivise and reward innovation”? The same could be asked about datacasting transmitter licences and spectrum licences. Even copyright and in house software need not be innovative but can be exceedingly mundane (merely documenting a standard practice or reengineering an off the shelf software package).

Put simply, buying a right to put a base station on a farmers land is in no way “innovative”.

Shouldn’t this amendment be limited to the intangible assets that are at least in some way related to innovation – like patents – if this is what the changes are supposed to encourage?

As such, this amendment should not apply to all the assets in the table in subsection 40-95(7). It should only apply to the innovative intangible assets, like patents.

Otherwise the proposed law and the purpose of the proposed law do not match. 

I promise the next blog post will be more interesting…

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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