They say that you should invest during a bear market. The Australian government even encourages the public to purchase Intellectual Property Assets. Whether you believe that acquiring assets during this period is a good move, you should mull things over since this involves cash. You might even want to reach out to solicitors specialising in commercial law.
An excellent reason for investing now is the Instant Asset Write-Off (IAWO) Scheme. It allows businesses to use this as a deduction. To encourage the public to make financial activities during the pandemic, the government made the following changes to the IAWO:
1.) The maximum threshold is now at $150,000. It was originally at $30,000. It applies to individual assets.
2.) Businesses with a yearly turnover of $50 million to $500 million are eligible for this incentive. But for them to take advantage of this, they must utilise the asset before 30 June 2022.
In the third quarter of 2020, Josh Frydenberg announced that entities with a maximum annual turnover of $5 billion can also take advantage of the IAWO. He reminded everyone of the 30 June 2022 cutoff date. If you find this interesting, you should pay close attention to this article.
What Type of Asset Is Eligible?
The IAWO scheme sounds interesting. But before you go on a shopping spree, you should ask a commercial law solicitor about its technicalities. One question you should ask is what type of asset is eligible. They will tell you that the qualified assets are the ones that the depreciation in value is deductible.
You might already have the legal description of the qualified asset. But how can you identify them? The IAWO scheme allows both tangible (such as office equipment) and intangible assets.
One excellent example of an eligible asset is Intellectual Property (IP). ITA sections 40-95 enumerates the effective life of the following IP assets:
1.) Standard patent – 20 years
2.) Innovation patent – 8 years
3.) Petty patent – 6 years
4.) Registered design – 15 years
5.) Copyright (except that of a film) – the shorter a.) 25 years from when you acquire the copyright; or b.) the period until the copyright ends
6.) License (except one relating to a copyright or in-house software) – the term of the license
7.) License relating to copyright (except that of a film) – the shorter of a.) 25 years from when you became the licensee, or b.) the period until the license ends
8.) In-house software – 5 years
Considering the many legal technicalities associated with the IP, it is prudent to reach out to a commercial law solicitor. This way, you get the most out of your purchase.
How Will This Impact the Business?
This purchase is quite expensive. But under the IAWO scheme, you can write off the cost of the eligible IP asset in the first financial year. The said cost includes the purchase price of the IP asset and the cost of maintaining and developing it.
You might be hesitant to make such a substantial investment. But if you see yourself purchasing eligible assets in the near future, why not just do it now? The returns outweigh the cost.However, before you take the plunge, you must ask the help of a solicitor that specialises in brand protection in Australia. At GLG Legal, we can guide you throughout the process, so that you can make the most out of this investment opportunity. Call us now for more information!