Updated draft guidance on software and IP payments and withholding tax
TR 2024/D1, which updates and replaces TR 2021/D4 (covered in the Birchstone Brief for the week ended 25 June 2021), contains the Commissioner’s updated views regarding when cross-border payments made by Australian resident entities (or non-resident entities connected to a permanent establishment in Australia) under a software arrangement will be treated as royalties and therefore subject to Australian royalty withholding tax. It is proposed that the draft ruling will apply retrospectively once finalised, to the extent that it does not conflict with the terms of settlement of any historical disputes.
PCG 2024/1 finalised: ATO compliance approach to intangibles migration arrangements
PCG 2024/1 sets out the ATO’s approach to applying compliance resources to consider the potential application of the general anti-avoidance rules (including the diverted profits tax) and/or the transfer pricing rules to certain cross-border arrangements involving the migration of intangible assets and international related parties. The Guideline:
- contains a risk assessment framework which the ATO will use to assess a taxpayer’s compliance risk, and which is intended to enable taxpayers to determine their risk profile;
- applies from 17 January 2024 to new and existing arrangements; and
- was previously issued in draft as PCG 2023/D2.
Addendum to Product Ruling issued
The ATO has issued PR 2023/9A1 – Addendum to PR 2023/9 – FTC Automator platform – Use by clients of KPMG and Directed Australia to calculate fuel tax credits.