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Do you know how to write off an intangible asset?

by , 09 July 2014
Not all your company's assets are physical objects made from wood and metal. Some of them are 'intangible' and these assets can sometimes be the most valuable.

But how do you work out the value of an asset you can't see or feel, let alone write off.

Read on below as the experts behind the Practical Tax Loose Leaf Service reveal the answer to you.

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What is an intangible asset?

 
An intangible asset is simply a non-monetary asset that isn't a physical substance. These intangible fixed assets can take the form of goodwill, patents, brands or trademarks. 
 
The value of assets like these is hard to calculate because you have to work it out based on the economic value the asset might have. 
 
Now that you understand what they are, let's look at how intangible assets depreciate so you can write them off...
 
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Here's the rate of depreciation you'll use on an intangible asset

 
If your spent money on developing or you bought your intangible asset after 1999, you can claim a tax allowance on it each year.
 
You can work out the asset depreciation as:
 
- 5% of the money you spent on inventions, patents, trademarks, copyright and any other assets of that nature; or
- 10% of the money you spent on any designs or other similar types of assets.
 
So let's say you spent R20 000 on a patent. Each year it depreciates by 5% according to the rules above. You can then claim that 5% depreciation as part of your wear and tear allowance. 


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