ATO ID 2004/858: Capital allowances: depreciating asset - intangible asset inclusions-intellectual property does not include trade mark
Date of decision: 6 October 2004
Year of income: Year ended 30 June 2001 Year ended 30 June 2002 Year ended 30 June 2003 Year ended 30 June 2004
Business line: Public Groups and International

Issue
Is a trade mark a depreciating asset as defined in subsection 40-30(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
No, a trade mark is not a depreciating asset as defined in subsection 40-30(1) of the ITAA 1997.

Facts
The taxpayer has registered a number of trade marks and incurred the following expenses:

Reasons for decision
Summary: A depreciating asset is defined in subsection 40-30(1) of the ITAA 1997 to be an asset that has a limited effective life and can reasonably be expected to decline in value over the time that it is used. The definition excludes land, trading stock and intangible assets, except for those intangible assets listed in subsection 40-30(2) of the ITAA 1997. A trade mark is not a tangible asset and is an intangible asset. Therefore, to be a depreciating asset in Division 40 of the ITAA 1997, it needs to be an intangible asset of a kind listed in subsection 40-30(2). A trade mark is defined in section 17 of the Trade Marks Act 1995 as: 'a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.' As a trade mark is a sign, it does not fit within paragraphs (a), (b) and (d) to (g) of the items listed in subsection 40-30(2), being: * denotes a term defined in section 995-1 of the ITAA 1997 However, paragraph 40-30(2)(c) of the ITAA 1997 provides that items of intellectual property, are depreciating assets, if they are not trading stock. Intellectual property is defined in section 995-1(1) of the ITAA 1997. The definition states: an item of intellectual property consists of the rights (including equitable rights) that an entity holds under a Commonwealth law as: (a) the patentee, or a licensee, of a patent; or (b) the owner, or a licensee, of a registered design; or (c) the owner, or a licensee, of a copyright; This definition of intellectual property does not include trade marks. For the purpose of applying the meaning of intellectual property in the ITAA 1997, a trade mark is not an item of intellectual property. In subsection 40-30(2), a trade mark is not included in any of the items listed. As a trade mark is not of a kind listed in subsection 40-30(2), but is an intangible asset, it is excluded from being a depreciating asset, by paragraph 40-30(1)(c) of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 Division 40 subsection 40-30(1) subsection 40-30(2) paragraph 40-30(2)(c) subsection 995-1(1)
Subject references: Depreciating assets Intangible assets Trade marks