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  • Intangibles arrangements – new draft compliance guideline

    This draft PCG focusses on helping taxpayers self-assess tax risks using a revised risk assessment framework.

    In response to feedback received on the first draft, we have released a second draft of our Practical Compliance Guideline PCG 2023/D2 Intangibles Arrangements for public comment.

    PCG 2023/D2 sets out our compliance approach to, and helps taxpayers to self-assess, the tax risks associated with cross-border arrangements with related parties relating to:

    • the mischaracterisation of Australian development, enhancement, maintenance, protection and exploitation (DEMPE) activities in connection with intangible assets
    • the restructure or change associated with intangible assets, referred to as ‘migration’ in the draft PCG.

    In this draft PCG, Assistant Commissioner Tim McCarthy explains 'there is a greater focus on guiding taxpayers through an expanded set of risk factors in the risk assessment framework to help them identify the level of risk associated with their arrangements. It will also help them identify when we are likely to apply compliance resources to those arrangements.'

    PCG 2023/D2 is intended to help taxpayers understand which intangibles arrangements we consider higher risk by:

    • providing a risk assessment framework which indicates when we are more likely to apply compliance resources to an arrangement
    • providing examples demonstrating how the framework can be applied in various scenarios
    • highlighting concerns previously communicated to taxpayers and their advisers in Taxpayer Alert TA 2020/1 Non-arm's length arrangements and schemes connected with the development, enhancement, maintenance, protection and exploitation of intangible assets.

    It’s important to note that this draft PCG is independent of, and does not address the multinational tax integrity measure Deductions for payments relating to intangible assets connected with low corporate tax jurisdictions announced as part of the 2022–23 Budget.

    PCG 2023/D2 includes information about how you can provide feedback by 16 June.

    Last modified: 24 May 2023QC 72706