Advice under development: Income tax: royalties – character of receipts in respect of software and intellectual property rights
Issue: Royalties and software
Category: International
Type of advice: Final Taxation Ruling
Status: Under development
Expected completion: To be advised | On 13 August 2025, the High Court handed down its decision in Commissioner of Taxation v PepsiCo Inc & Anor [2025] HCA 30 . We are currently considering this decision, including any broader impact it may have on the reasoning set out in Draft Taxation Ruling TR 2024/D1 Income tax: royalties – character of receipts in respect of software and intellectual property rights . See Decision impact statement on Commissioner of Taxation v PepsiCo Inc & Anor [2025] HCA 30.
Purpose: Advice on the development and marketing of software was previously provided in Taxation Ruling TR 93/12W Income tax: computer software (now withdrawn). There is a need to provide updated guidance on modern forms of software distribution, including digital channels and cloud computing. This Ruling will provide the Commissioner’s view on the circumstances in which amounts in respect of the licensing and distribution of software will be royalties as defined in subsection 6(1) of the Income Tax Assessment Act 1936 .
Comments: Draft Taxation Ruling TR 2021/D4 Income tax: royalties – character of receipts in respect of software published on 25 June 2021. Having regard to comments and submissions received in relation to TR 2021/D4, the Commissioner prepared a further draft Ruling and TR 2024/D1 published on 17 January 2024. Comments period closed on 1 March 2024 and all submissions are currently being considered.
Referenced documents: TR 93/12W | [2025] HCA 30 | TR 2024/D1 | Decision impact statement | TR 2021/D4