Intangible integrity intensity

Published Date: 1 Aug 2023


A new measure has come into effect, denying certain deductions for intangible-related payments. The measure, to be contained in new s 26-110 of the Income Tax Assessment Act 1997 (Cth), is in exposure draft form but has a start date of 1 July 2023. The payments that it applies to are those made by a significant global entity, of which there are about 10,000 in Australia, to an associate where the payment is attributable to the right to exploit an intangible asset and results in an associate deriving income in a jurisdiction where the corporate tax rate is less than 15% and the income is in fact taxed at less than 15%. The measure is wide in scope and raises a number of issues, both as to its terms and as to its relationship with the OECD/G20 Pillar Two minimum tax measures that Australia plans to implement from 2024.

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