(b) consideration for the grant of distribution rights in relation to software where the distributor is not permitted to do anything in relation to the software that is the exclusive right of the owner of the copyright in the software (see Example 6 of this Ruling). (a) consideration for the grant of a licence which allows only the simple use of software, that is, it allows the licensee or end-user to use the software for the purpose for which it was designed, but does not otherwise permit the end-user to use the copyright in the software (see Example 3 of this Ruling). The following amounts are not royalties as defined in subsection 6(1) of the ITAA 1936: (c) consideration for the supply of assistance furnished as a means of enabling the application or enjoyment of the supply (paragraph (d) of the definition) (see Example 7 of this Ruling, and contrast Example 8 of this Ruling).Ħ. Examples include payments for the supply of source code relating to software (see Example 2 of this Ruling, and contrast Example 3 of this Ruling). (b) consideration for the supply of know-how in relation to software (paragraph (c) of the definition). (i) the licensee to reproduce software or to modify or adapt software (see Examples 1 and 2 of this Ruling, and contrast Example 3 of this Ruling), and (ii) a distributor of software to sub-licence the use of the software, whether the software is distributed by way of physical carrying media, digital download or cloud-based technology (see Examples 4 and 5 of this Ruling, and contrast Example 6 of this Ruling). Examples include payments for the grant of a licence which permits (a) consideration for the grant of a right to do something in relation to software that is the exclusive right of the owner of the copyright in the software (paragraph (a) of the definition). An amount is a royalty as defined in subsection 6(1) of the ITAA 1936 to the extent that it is paid or credited as: The character of receipts from the licensing and distribution of software depends on the terms of the agreement between the parties taking into account all the facts and circumstances of the particular case.ĥ. These matters are considered to be generally well understood and it is proposed to deal with them through guidance to be published on .Ĥ. In addition to the matters covered by this Ruling, TR 93/12 dealt with the assessability of receipts in respect of software and the treatment of software as trading stock under subsection 70-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997). This Ruling replaces Taxation Ruling TR 93/12 Income tax: computer software, which has been withdrawn from 1 July 2021.ģ. This draft Ruling deals with the circumstances in which receipts from the licensing and distribution of software will be royalties as defined in subsection 6(1) of the Income Tax Assessment 1936 (ITAA 1936).Ģ. Summary - what this draft Ruling is aboutġ. However, you may still have to pay the correct amount of tax. If this draft Ruling applies to you and you rely on it reasonably and in good faith, you will not have to pay any interest or penalties in respect of the matters covered, if this draft Ruling turns out to be incorrect and you underpay your tax as a result. It represents the Commissioner's preliminary view on how a relevant provision could apply. This publication is a draft for public comment.
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