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At a glance
- Final ATO guidance now released.
- ATO risk assessment of intangibles transactions.
- Point-scoring system assigns risk ratings.
- Requires significant amount of analysis and supporting evidence for ‘in- scope’ intangibles arrangements.
- Many taxpayers with typical business structures will be “high risk”.
- How EY can help.
On 17 January 2024, the Australian Taxation Office (ATO) released the final guidance on intangible arrangements with international related parties in the Practical Compliance Guideline (PCG) 2024/1, which supersedes the drafts previously released (PCG 2021/D4 and PCG 2023/D2).
This represents the latest of the ATO’s transfer pricing-focused PCGs, and it further emphasises the ATO‘s ongoing focus on cross-border dealings involving intellectual property. Consistent with this compliance focus, there is a strong emphasis on the ’economic substance’ of arrangements. The ATO is highlighting again in this PCG that they will not be limited by the ’legal form’ of taxpayers’ arrangements.
The PCG has potentially wide application across all industry sectors where there are transactions involving IP.