The Tax Institute welcomes the opportunity to make a submission to the Australian Taxation Office (ATO) in
relation to the draft Taxation Ruling TR 2021/D4 “ Income tax: royalties “ character of receipts in respect of
software (Draft Ruling).
We invite the ATO to consider our submission and respectfully request that further action as recommended in
this submission is taken to enhance the Draft Ruling to ensure clear guidance and practical insight is provided
to the community. We have set out below our main concerns in relation to the Draft Ruling, in particular:
- matters which were within the scope of Taxation Ruling TR 93/12 Income tax: computer software (TR 93/12) but are not within the scope of the Draft Ruling should be addressed in interpretive guidance and not through guidance published on the ATO's website;
- we consider that further clarity and guidance including practical examples are required to demonstrate the way in which the Commissioner intends to apply copyright law principles and definitions to tax law principles and definitions; and
- we consider that the Draft Ruling should apply on a prospective basis but to the extent that it does not, clarity should be provided as to the extent that it applies retrospectively and appropriate transitional arrangements should be made.