Business taxation Large business Royalties

Draft Taxation Ruling TR 2024/D1 – Income tax: royalties – character of receipts in respect of software and intellectual property

Published Date: 20 Mar 2024


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The Tax Institute welcomes the opportunity to make a submission to the Australian Taxation Office (ATO) in relation to the draft Taxation Ruling TR 2024/D1 Income tax: royalties – character of receipts in respect of software and intellectual property (Draft Ruling).

In the development of this submission, we have closely consulted with our National Large Business & International Technical Committee and a working group of members with expertise in this area, to prepare a considered response that represents the views of the broader membership of The Tax Institute. We have also reviewed a copy of the comments submitted by the Law Council of Australia dated 18 March 2024 (LCA submission).

We have outlined below our primary concerns and emphasise the need to resolve them prior to finalising the Draft Ruling. In this regard, we request the ATO to consider our concerns and take appropriate action to improve the clarity and practicality of the Draft Ruling. In summary:

  • the Draft Ruling’s ‘liberal interpretation’ of copyright and other IP law contains statements of legal principle that are, in our view, likely to be incorrect and inconsistent with established jurisprudence;
  • relatedly, the proposed abandonment of the ‘simple use’ concept will likely give rise to a number of unintended consequences for tax compliance and administration purposes;
  • as a result of the above-stated concerns, the Draft Ruling has an unduly broad scope of application which appears to give effect to a change of position or an expansion in the ATO’s views when compared against the former TR 93/12 Income tax: computer software (1993 Ruling) and draft Taxation Ruling TR 2021/D4 Income Tax: royalties – character of receipts in respect of software (2021 Draft Ruling); and
  • we consider that the Draft Ruling should apply on a prospective basis only. Prospective application is, in our view, fair and reasonable, having regard to the exceptional circumstances relating to the development of this particular public advice and guidance (PAG) product and also consistent with TR 2006/10 (in particular, paragraph 62) and PS LA 2011/27 (in particular Section 5).

Further detail can be found in the attached downloadable submission.


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Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))


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Business taxation Large business Royalties

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