Royalties – Character of payments in respect of software and intellectual property rights
Royalties – Character of payments in respect of software and intellectual property rights
BDO was invited by the Australian Taxation Office (ATO) to provide feedback following the recent release of draft ruling TR 2024/D1 (Draft Ruling).
Our feedback in relation to the ATO’s views as set out in draft ruling TR 2024/D1 is detailed in the Appendix that follows the letter linked below.
BDO’s feedback includes
- The ATO’s views on whether payments are royalties rely heavily on contestable liberal interpretations of concepts set out in the Copyright Act 1968 (Cth) and other Intellectual property (IP) laws.
- The lack of comments in the Draft Ruling on whether payments for the simple use of software by end-users are royalties subject to withholding tax could potentially cause confusion over whether these simple uses of software by end-users have any royalty withholding tax obligations.
- Payments by software distributors to the software owners are one of the main focuses of the Draft Ruling, but there is very little comment in the Draft Ruling on how to determine how much of that payment is for the use of copyright or other intellectual property.
Further feedback is detailed in our submission to the Australian Tax Office.
Contact a member of our team to learn more about our submission.