The deadline to submit comments is 17 September 2025.
The Australian Tax Office (ATO) has initiated a public consultation on draft guidance, Practical Compliance Guideline (PCG) 2025/D4, on 6 August 2025, about cross-border software payments.
This draft PCG aims to clarify which types of cross-border software payments will not draw the attention of tax authorities. The tax authorities do recognise that there is a low risk that cross-border payments in connection with software have been materially mischaracterised, and therefore won’t take any compliance action.
In response to feedback received during last year’s public consultation on draft Taxation Ruling TR 2024/D1: Income tax: royalties – character of payments in respect of software and intellectual property rights, the ATO has prioritised the finalisation of this guidance. The aim is to provide greater certainty to businesses within scope and to assist them in avoiding unnecessary compliance costs.
The PCG outlines the ATO’s administrative approach to its interpretation of the law but does not itself present the ATO’s view of the law, which is addressed separately in TR 2024/D1.
Stakeholders are encouraged to provide feedback during the six-week consultation period, particularly to the criteria supporting the green zone, practical issues arising from the application of the PCG, the clarity and relevance of the provided examples and scenarios, and any other matters that should be addressed in the final version.
Comments can be submitted via email to intangiblesarrangements@ato.gov.au by 17 September 2025.
