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Other Assets and Costs of a Capital Nature

8.110. The existing law has been criticised for its failure to make allowances available for the cost of assets not falling within the ambit of the depreciation provisions and for the costs of a capital nature incurred in business operation but having limited enduring value. The items include costs of acquiring know-how and trade rights, some expenses of moving the site of operations, feasibility studies and costs of capital-raising.

8.111. With the introduction of capital gains tax, thought would need to be given to whether some of these costs should qualify for amortisation allowances, similar to those available to primary producers under section 75A (paragraphs 18.23–18.25). Alternatively, losses arising from expenditure of this nature could be made to fall within the definition of capital losses for capital gains tax purposes, though there would often be problems in fixing the time when losses of this nature are to be treated as having been incurred.

8.112. The Committee is inclined to the view that at least some of these costs could be conveniently dealt with by a provision similar to section 75A, which would make the costs allowable, over a period of years, against income.

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