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Withholding tax on partial assignments of copyright


The tax treatment of payments made by Australian residents to non-residents in respect of copyright depends on the proper characterisation of the payment, in particular, whether a payment is a "royalty". Australian law imposes a withholding tax on royalties paid to non-resident copyright owners. The Commissioner of Taxation accepts that consideration for an "outright sale" of copyright is not a "royalty", but contends that consideration for partial assignments of copyright constitutes "royalties" which are subject to withholding tax. The Commissioner's view is set out in TR 2008/7.

This article outlines the relevant provisions of the withholding tax and copyright regimes, identifies the "four pillars" on which the Commissioner's view is founded, and critically analyses those pillars. Based on that analysis, the author makes suggestions in relation to the future administration of the withholding tax regime, and steps that affected taxpayers should consider taking to protect their economic interests.

Author profile

Christopher Peadon FTI
Chris, FTI, is a barrister at the New South Wales Bar. He has 15 years experience in tax, including five at the Bar. He regularly advises and appears for taxpayers and the Commissioner. Many of his matters involve issues concerning the taxation of direct and indirect interests in land, including Div 855 (TARP) and landholder duty. - Current at 07 March 2016
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