Deloitte Lawyers helps taxpayer win $239 million copyright valuation case

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Deloitte Lawyers helps taxpayer win $239 million copyright valuation case

On 25 March 2014, the Federal Court of Australia delivered its decision, in favour of the taxpayer, in the matter of SPI PowerNet Pty Ltd v Commissioner of Taxation [2014] FCA 261.

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On 25 March 2014, the Federal Court of Australia delivered its decision, in favour of the taxpayer, in the matter of SPI PowerNet Pty Ltd v Commissioner of Taxation [2014] FCA 261.

Aldrin De Zilva, tax litigation specialist at Deloitte Lawyers, who acted on behalf of the taxpayer, said: “This case sets an important precedent by establishing taxpayers’ rights to copyright deductions.”

In particular, this decision is of significance to taxpayers who have acquired copyright under broader asset sale agreements where no part of the purchase price paid has been allocated to the copyright.

The case concerned the taxpayers’ entitlement to claim capital allowances deductions, over a number of income years, for the acquisition cost of intellectual property acquired during the privatisation of the Victorian electricity transmission network. The copyright was acquired under a purchase agreement which did not allocate the purchase price paid between various business assets, including the copyright. Both the taxpayers and the Commissioner of Taxation sought and relied upon expert valuations in determining the cost of the copyright acquired for the purposes of the capital allowance deductions.

This dispute related to a transaction undertaken in 1997 and involved establishing ownership and subsistence of copyright in over 100,000 drawings and documents.

Mr De Zilva stated: “In addition to establishing certain important copyright and valuation principles, the decision provides important guidance on how taxpayers may be able to discharge their burden of proving their entitlements to deductions in situations involving considerable evidentiary challenges, such as a considerable amount of underlying supporting data and significant delays in the proceedings coming before the courts.”

His Honour decided in favour of the taxpayers in the proceedings, finding that the taxpayers’ valuations of the replacement cost of the items of copyright were relevant in determining the part of the purchase price that was to be allocated to the copyright and forming the basis of the copyright deductions claimed by the taxpayers.

The Commissioner of Taxation has 21 days to consider whether to appeal the decision.

Deloitte Lawyers helps taxpayer win $239 million copyright valuation case

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