Royalties include consideration of any kind paid or credited for:
- the use of, or right to use
- any copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right
- industrial, commercial or scientific equipment
- motion picture films
- films or video tapes for use with television
- tapes for use with radio broadcasting
- visual images and or sounds transmitted by satellite, cable, optic fibre or other similar technology, in connection with television or radio broadcasting
- capacity covered by a spectrum licence under the Radio Communications Act 1992
- the supply of scientific, technical, industrial or commercial knowledge or information
- the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of any property, right, equipment, knowledge or information mentioned in 1a, 1b or 2
- the reception of, or the right to receive, visual images or sounds transmitted to the public by satellite, cable, optic fibre or similar technology
- the total or partial forbearance in respect of the previously listed activities.
Show royalties derived by an Australian resident as income in the normal manner.
Royalties paid by a resident to a non-resident may be subject to withholding tax. The rate for royalties is 30%; however if there is a double tax agreement, the rate may be reduced.
For more information, see Taxation Ruling IT 2660 Income tax: definition of royalties.
Record keeping
If the trust claims a deduction for royalties paid or credited, keep a record of the name and address and the amounts paid or due to each person. If payment was made to a non-resident, keep details on whether or not tax has been paid or an amount withheld to provide for tax payable by the non-resident.