Issue
Are statutory licences, academic qualifications and courses 'similar rights' to 'trademarks, patents and copyrights' within the meaning of Item 4 of the other assets test in section 35-45 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. Statutory licences, academic qualifications and courses are not 'similar rights' to 'trademarks, patents and copyrights' within the meaning of Item 4 of the other assets test in section 35-45 of the ITAA 1997.
Facts
An individual taxpayer carried on a viticultural business activity during the 2001-03 income years.
The taxpayer acquired water licences, academic qualifications and attended courses in a previous year. These assets were used on a continuing basis in carrying on the viticultural business activity in the 2001-03 income years. The taxpayer assigned values to the academic qualifications and courses.
Reasons for Decision
The value of certain assets can be included for the purposes of the other assets test in section 35-45 of the ITAA 1997. These values are set out in the table in subsection 35-45(2) of the ITAA 1997. They are:
Item 1. An asset whose decline in value you can deduct under Division 40;
Item 2. An item of trading stock;
Item 3. An asset that you lease from another entity;
Item 4. Trademarks, patents, copyrights and similar rights.
Assets specifically excluded from being counted for this test are assets or interests in real property that are taken into account for that year under the real property test (section 35-40 of the ITAA 1997) and cars, motor cycles and similar vehicles (subsection 35-45(4) of the ITAA 1997).
Item 4 specifically includes 'trademarks, patents and copyrights', it also includes rights that are similar to these assets. The scope of the rights that are included as being similar is determined by the context in which the word 'similar' appears.
'Intellectual property' is defined in Osborn's Concise Law Dictionary (ninth edition) as: An all-embracing term covering copyright (q.v.), patents (q.v.), trade marks (q.v.) and analogous rights found on confidence and passing off (q.v.). The term describes those rights which protect the product of one person's work by hand or brain against unauthorised used or exploitation by another...
The rights preceding 'and similar rights' at Item 4 are entirely of the genre of intellectual property rights. In this context, 'similar rights' as the term is used at Item 4 refers to any rights which protect the product of one person's work by hand or brain against unauthorised use or exploitation by another.
In this case, the taxpayer's water licences, academic qualifications and courses are not rights protecting the product of a person's work by hand or brain against unauthorised use or exploitation by another. Therefore the water licences, academic qualifications and course assets are not considered to be similar rights to trademarks, patents and copyrights for the purposes of Item 4 of the other assets test in subsection 35-45(2) of the ITAA 1997. Their values cannot be included for the purposes of the other assets test.