In response to feedback on our previous draft Ruling, we've released a new draft Ruling TR 2024/D1 Income tax: royalties – character of payments in respect of software and intellectual property rights. The new draft Ruling is now open for public comment.
It addresses circumstances in which the Commissioner considers payments relating to software will be royalties.
The new draft Ruling includes more detailed examples and provides further detail as to the Commissioner's view of the:
- interaction between the domestic law and tax treaty definitions of royalties
- interpretation and application of the Copyright Act 1968
- extent to which payments are royalties
- kinds of modern software distribution arrangements we are seeing, including 'software-as-a-service'
- circumstances where the final Ruling will apply before its date of issue
- This has replaced the Commissioner’s previous guidance on the royalty withholding tax obligations related to software being TR 2021/D4 and TR 93/12, which were withdrawn on 17 January 2024 and 30 June 2021 respectively.
See TR 2024/D1 on our legal database and find out how you can submit your comments, which are due by 1 March 2024.