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Australian Parliament Considering Draft Bill Providing for Self-Assessment of Effective Life of Intangible Assets — Orbitax Tax News & Alerts

The Australian parliament is considering the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022. The main tax measures of the bill concern the depreciation of intangible assets, which provide taxpayers with the choice to self assess the effective life of certain intangible depreciating assets they start to hold on or after 1 July 2023, rather than using the statutory effective life currently specified in the law. The intangible assets to which this choice will apply include:

  • a standard patent;
  • an innovation 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; and
  • a telecommunications site access right.

Taxpayers will also be allowed to recalculate the effective life in later income years if the effective life the taxpayer has been using is no longer accurate because of changed circumstances relating to the nature of the asset's use. Further, if the cost of the asset increases by at least 10% in a later income year the taxpayer must recalculate the effective life of the asset.