Changes to the depreciation of intangible assets
Business taxpayers will know that asset depreciation is an important aspect to their business’s tax health and longevity. However the importance, and revenue generation role, of knowledge-based or intangible assets has become much more common in the modern business landscape.
Innovative companies know that changes in the economy, including globalisation and digitisation, have elevated the importance of intellectual property and other intangible assets, which has not been adequately recognised in the tax system.
For purposes of income tax, certain intangible assets have been depreciated over a number of years, set by statute (taxable effective life). However intangible assets with a statutory effective life can’t be self-assessed to bring their tax life in line with the economic life of the asset. This can reduce the depreciation benefit and increase the cost of investment in these assets. […]