Plenty of publicity has been given to the tax implications of IP management within multinational organisations. Glasshouse Advisory works with taxpayers as well as the ATO to ensure that related party IP assignments and licenses are at market value or arm’s length terms. The following example illustrates the tax benefits that can result from the informed allocation of value to specific intangible assets.
As a result of several corporate acquisitions, a public company had a significant amount of goodwill on its balance sheet.
The company’s tax adviser briefed our IP Economics team to prepare an independent report providing an opinion as to whether any of this value should be attributed to internally generated software. Our analysis revealed that a core asset of each of the acquired businesses was enterprise software systems that were fundamental to the operations, billing and customer management of each entity. The software platforms met the accounting definition of ‘identifiable assets’ and should have been separately disclosed for tax purposes.
Because software can be amortised for tax purposes, we understand that the company will gain additional tax deductions of over $40 million.