Statutory Depreciation Regimes for Intangible Assets

Abstract

Currently, Australia’s uniform capital allowance system does not include a single mechanism for recognising the cost of intangible wasting assets. Instead, it has a number of separate and to some extent inconsistent regimes for different types of assets recognised by statute. It has been suggested that Australia should adopt a single mechanism to enable the tax system to accurately measure net income. However, implementing this suggestion would be ineffective without an in-depth understanding of the existing depreciation rules that apply to certain types of intangible assets. This article examines the history of the rules relating to four categories of depreciating assets and the policies underlying them: 1) rights and information in the resource industry; 2) intellectual property, other than trademarks, protected by statute; 3) in-house software; and 4) statutory or contractual rights relating to media and telecommunications. While these intangible wasting assets differ significantly, reviewing the depreciation rules for each category provides useful insights for building a new universal depreciation regime that can apply to all intangible wasting assets.