Section DB 38 — Income Tax Act 2007: Patent rights: devising patented inventions

DB 38 Patent rights: devising patented inventions When this section applies (1) This section applies when a person incurs expenditure in devising an invention for which a patent has been granted. The section applies whether the person devised the invention alone or in conjunction with another person. Deduction: expenditure before 1 April 1993 (2) When the person uses the patent in deriving income in an income year, they are allowed a deduction for expenditure incurred before 1 April 1993, but not if a deduction has been allowed for the expenditure under any other provision of this Act or an earlier Act. Deduction: devising invention (3) If the person sells all the patent rights relating to the invention, they are allowed a deduction for the expenditure that they have incurred, whenever it is incurred, in connection with devising the invention to the extent to which a deduction has not already been allowed under subsection (2). Deduction: devising invention: proportion of expenditure (4) If the person sells some of the patent rights relating to the invention, they are allowed a deduction for part of the expenditure described in subsection (3). The part is calculated by dividing the amount derived from the sale by the market value of the whole of the patent rights on the date of the sale. Link with subpart DA (5) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply. Defined in this Act: amount , capital limitation , deduction , general limitation , general permission , income , income year , patent right , Compare: 2004 No 35 s DB 29