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Australia: Guidance addresses non-arm’s length arrangements involving intangible assets

Australia: Guidance on non-arm’s length arrangements

The Australian Taxation Office (ATO) today, 22 January 2020, released a “taxpayer alert” that addresses international non-arm’s length arrangements involving intangible assets.

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The ATO release—Taxpayer Alert TA 2020/1 Non-arm’s length arrangements and schemes connected with the development, enhancement, maintenance, protection and exploitation of intangible assets—addresses international arrangements that mischaracterise Australian activities connected with the development, enhancement, maintenance, protection, and exploitation (DEMPE) of intangible assets.

In releasing this alert, the ATO expressed concerns that the identified arrangements do not appropriately remunerate Australian entities for functions performed, assets used, and risks assumed in connection with intangible assets. The ATO also noted these arrangements may involve the migration of Australian intangible assets and associated rights to international related parties on non-arm’s length terms or in a manner intended to avoid tax in Australia. The alert includes three specific examples to illustrate its position.


KPMG observation

According to tax professionals in Australia, there are reports the ATO is currently developing a Practical Compliance Guideline (PCG) to outline its compliance approach in respect of intangibles arrangements. 


For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice in Australia:

Jane Rolfe | +61 3 9288 6341 | janerolfe@kpmg.com.au

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