ATO Taxpayer alert: copyright arrangements under examination

The Tax Office is looking at the tax treatment of certain copyright arrangements for companies looking to consolidate. Tax Commissioner Michael Carmody said the Tax Office will look at arrangements that seek substantial copyright tax deductions for assets containing knowledge and information, such as client lists."Our concern is that the value of any copyright applicable under these arrangements may be inflated, leading to excessive capital allowance claims," Mr Carmody said.The taxpayer alert describing the arrangements and the ATO’s concerns has been issued and is available at alert: prepaid service warrant arrangements Second Commissioner of Taxation Jennie Granger today warned taxpayers to be wary of promoters offering to reduce tax on profits through a prepaid service warrant arrangement. Under the arrangement the taxpayer or a partnership claims to enter into a ‘business agent dealership’. The ‘dealership’ claims to be in the business of buying and selling prepaid service warrants which can be redeemed for legal and professional services.The taxpayer or partnership entering into the dealership claims to buy a series of warrants and then claims the full cost of the warrants as a deduction. For example, a warrant offering legal services to the value of $50,000 can be purchased by paying just $7,500, with the remaining balance owing to the service provider."These arrangements claim to produce a tax deduction greater than the small amount paid for the warrant in the financial year they are acquired,” Ms Granger said. "We are warning taxpayers to be wary of promoters offering to reduce tax on profits through a prepaid service warrant arrangement."We are concerned these arrangements may breach a number of provisions of the tax law, including the general anti-avoidance provisions." A taxpayer alert has been issued and is available at

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