Following a recent Federal Court case concerning Primary Health Care Ltd and their depreciation claims on copyright in medical records, the ATO has released a Decision Impact Statement which clarifies their position on this topic, as determined by the outcome of the court case.
Issues under consideration in the court case included
- whether copyright existed, or had any value, in medical and dental records – in most cases, it seems unlikely that there’s anything of worth that could be considered depreciable for tax purposes.
- whether copyright automatically transfers with the sale of a business – the ATO DIS seems to make it clear that such transfer of copyright must be expressly stated in the contract of sale, it can’t just be assumed to be included.
In the ATO’s Decision Impact Statement several key points were highlighted, which will be of interest to medical and dental practices, but also perhaps to others considering a business purchase which may potentially include copyright.
The ATO said the decision:
- highlights the limitations on the copyright likely to subsist in medical or dental records;
- clarifies that there is no implied transfer or licence to use copyright in the absence of an express contractual clause requiring the transfer of intellectual property; and
- clarifies the amount of consideration attributable to the transfer of copyright under a contract.
If you’re unclear on any of these issues, it would be wise to consult your accountant.