This Draft Ruling, released Wed 29.5.2013, deals with when commercial software developers derive income for the purposes of s 6-5 of the ITAA 1997 from licence agreements, and “hosted” or “cloud” arrangements.
Broadly, the Ruling states where an amount properly attributable to a contractual obligation is subject to a “contingency of repayment”, the amount is derived for the purposes of s 6-5 of the ITAA 1997 when the obligation is fully performed or the contingency of repayment otherwise lapses. It says a “contingency of repayment” in the event of non-performance includes a contractual obligation to make a refund, or contractual exposure for damages. The Ruling states that potential exposure to damages under tort or consumer protection law does not amount to a “contingency of repayment”.
DATE OF EFFECT: When the final Ruling is issued, it is proposed to apply both before and after its date of issue.
COMMENTS are due by 26 June 2013. ATO contact: David Newland – Tel: (03) 6221 0625; Fax: (03) 6221 0460; Email: David.Newland@ato.gov.au.
[LTN 102, 29/5/13]