Other ATO Developments
Business costs: acquisition of franchise business
09.01.2009
According to an interpretative decision, no part of the price the taxpayer paid to acquire a business of franchising was capital expenditure on acquiring confidential information, trade secrets and know-how of the business for which a deduction may be allowable under sec 40-880 ITAA 1997 (business related costs) (ID 2009/3). This was because the character of the transaction and the nature of the assets acquired prescribed that the purchase price was paid to acquire the various rights that collectively constitute the business acquired. The whole of the capital expenditure incurred by the taxpayer was incurred on those rights and, therefore, was excluded from deduction under sec 40-880 ITAA 1997 by the operation of sec 40-880(5)(f) ITAA 1997.
