Intangibles migration refers to arrangements connected with the development, enhancement, maintenance, protection, and exploitation (DEMPE) of intangible assets, resulting in:
- disposal or migration of locally developed intangible assets (and associated future profit streams) to offshore jurisdictions on non-arm's length terms
- mischaracterisation and non-recognition of Australian activities connected with intangible assets held offshore
- mischaracterisation of payments to offshore entities in connection with intangible assets, such as the mischaracterisation of royalties as other types of payments (e.g. licence fees, service fees, tangible goods) to avoid withholding tax
- mispricing or non-recognition of arrangements relating to intangible assets to reduce tax liabilities.
We're concerned with privately owned and wealthy groups engaging in any transaction that allows an offshore party to access, hold, use, transfer or obtain benefits in connection with Australian-generated intangible assets or associated rights on non-arm's length terms.
For more information and other useful resources, see:
- Practical Compliance Guideline PCG 2024/1 Intangibles migration arrangements if you have an intangibles migration arrangement that involves an international related party, to self-assess the tax risk of your arrangement(s).
- Taxpayer Alert TA 2020/1 Non-arm's length arrangements and schemes connected with the development, enhancement, maintenance, protection and exploitation of intangible assets provides a summary of our concerns regarding international arrangements that mischaracterise Australian activities connected with intangible assets.
- Taxpayer Alert TA 2018/2 Mischaracterisation of activities or payments in connection with intangible assets provides a summary of our concerns regarding international arrangements that mischaracterise intangible assets or activities connected to intangible assets.