The ATO releases PCG 2024/1 with Cross-Border Intangibles in its crosshair

Luca Wright, Anthony Patrk, Jason Matchado

On 17 January 2024, the ATO released the eagerly anticipated Practical Compliance Guideline 2024/1 (PCG 2024/1) as its focus towards transfer pricing matters involving intangibles migration arrangements has increased since the ATO released its first draft PCG related to the migration of intangibles in 2021. 

PCG 2024/1 sets out the ATO’s practical and administrative approach to assist taxpayers in understanding when the Commissioner is likely to apply resources to consider the potential application of the general anti-avoidance rules or the transfer pricing rules to intangibles migration arrangements associated with the: 

  • Migration of intangible assets, and 
  • Mischaracterisation and non-recognition of Australian activities connected with intangible assets. 

Due to the complexity of the PCG 2024/1, it is important to first understand the definition of some key language and terminology used by the ATO. 

Key definitions

  • Intangible migration arrangements – refers to cross-border arrangements involving the migration of intangible assets, or arrangements with similar effect. This includes arrangements relating to Australian Development, Enhancement, Maintenance, Protection and Exploitation (DEMPE) activities in connection with intangible assets held offshore. 
  • Intangible assets – refers to property, assets and rights that are not:  
  1. physical or financial assets;  
  2. which are capable of being controlled for use in commercial activities; and  
  3. are not restricted by any accounting or legal concepts or definitions. 
  • Migration – refers to any restructure of change associated with intangible assets that allows another entity to access, hold, use, transfer or benefit from the intangible assets. 


The guideline is structured in three parts: 

  • Part 1: Compliance – sets out ATO’s compliance approach towards Intangibles Migration Arrangements. 
  • Part 2: Risk management framework – sets out ATO’s approach towards assessing the compliance risk for Intangibles Migration Arrangements. 
  • Part 3: Evidence expectation – sets out ATO’s requirements for the type and level of evidence for examining the Intangibles Migration Arrangements.  

Each part is described further below. 

Part 1 – Compliance Approach

Taxpayers are expected to self-assess against the ATO’s risk assessment framework in Part 2 of PCG 2024/1 to determine the risk zone of each identified intangibles migration arrangement.  

Risk Zone Risk Rating
Green Lower risk
Blue Lower to medium risk
Amber Medium risk
Red Higher risk
White Further risk assessment not required

The self-assessed risk rating will then determine the ATO’s compliance approach, whether and how the ATO is likely to engage with taxpayers. The higher the risk rating, the higher the risk of review or audit by the ATO. The ATO is unlikely to apply resources to further examine intangibles migration arrangements in the Green risk zone.  

Taxpayers may be required to report their risk rating for each intangibles migration arrangement and may be required to evidence accurate application of the self-assessed risk rating. 

Part 2 – Risk assessment framework

Part 2 of PCG 2024/1 explains how to assess the compliance risks of intangibles migration arrangements. 


Taxpayers are required to self-assess in accordance with PCG 2024/1 annually. Each self-assessment must be completed prior to the lodgement of tax returns for the relevant income year. 

Identification of intangibles migration arrangements

In order to self-assess, taxpayers must first appropriately identify each intangibles migration arrangement entered into during the income year. PCG 2024/1 does however allow for multiple intangibles migration arrangements to be treated as one arrangement if it is more reasonable and appropriate to do so and provides examples in Appendix 1 of the PCG with regards to the grouping of intangibles migration arrangements. 

PCG 2024/1 excludes three types of arrangements from the risk assessment framework: 

  • Outbound Distribution Arrangement  
  • Inbound Distribution Arrangement  
  • Low Value Services Arrangement  

The nature of the above arrangements must be routine in nature, with no involvement in any development, enhancement, or maintenance (DEM) activities. Additional criteria is also required to be met for the exclusions to apply. 

Applying the risk assessment framework

The risk assessment framework of PCG 2024/1 comprises of two separate tables: 

  • Risk Assessment Framework Table 1 is to assess the compliance risks in relation to a migration of intangible assets 
  • Risk Assessment Framework Table 2 is to assess the compliance risk of an intangibles migration arrangement involving Australian activities (such as DEMPE) in connection with intangible assets held offshore. 

Both tables apply a point scoring system whereby taxpayers assign points based on responses to questions in each table. The final risk zone rating is determined by the total number of points scored in either Risk Assessment Framework Tables 1 or 2:

  • Red zone (higher risk) – 35 or more points 
  • Amber zone (medium risk) – 25 to 34 points 
  • Blue zone (lower to medium risk) – 20 to 24 points 
  • Green zone (lower risk) – less than 20 points 

If a different risk rating is achieved under each of the Risk Assessment Framework tables, the higher risk rating will be the overall risk rating for an intangibles migration arrangement. 

Part 3 – Evidence expectation

Appendix 2 of PCG 2024/1 provides examples of evidence the ATO expects taxpayers to maintain and supply to substantiate each intangibles migration arrangement. These examples include, but are not limited to: 

  • Legal agreements, memorandums and documents associated with the arrangements 
  • Ownership details of the intangible assets 
  • Details of planning in connection with setting up new legal arrangements or entering into new legal documentation 
  • All relevant guidelines, manuals, policies and such documents developed or maintained by the taxpayer 
  • Transfer pricing documents including any supplementary analysis or valuation, or any other relevant reports produced for the transactions related to intangibles migration arrangements.  

The ATO acknowledges that not all arrangements will require the same level of evidence and will be based on the complexity of the business and arrangements. The level of evidence the ATO has listed in PCG 2024/1 does not come as a surprise, with the ATO routinely expecting similar levels of evidence to substantiate intangibles migration arrangements during tax reviews and audits in recent years. 


Intangibles-related transactions have been an ATO focus for several years now, and it is important to note that there is no materiality threshold to the application of PCG 2024/1. This means that PCG 2024/1 casts a wide net with virtually all cross-border intangible related transactions (other than those specifically exempted), captured by PCG 2024/1.  

Further, taxpayers with Reportable Tax Position (RTP) schedule obligations will be required to disclose the PCG 2024/1 self-assessed risk rating as part of the RTP schedule.  

All taxpayers, particularly those part of multinational organisations, should consider whether their Australian operations are involved in any intangibles migration arrangements. If so, we encourage you to put in place appropriate procedures and processes to ensure compliance with PCG 2024/1.  

Contact us

The Tax Advisory team here at Crowe can help your organisation navigate the complexities and obligations of Intangibles Migration Arrangement PCG 2024/1. Get the expert guidance your group will need by contacting us today. 

  • Luca Wright, Partner – Transfer Pricing 
  • Anthony Patrk, Partner - Tax Advisory
  • Jason Matchado, Partner – Tax Advisory 


The views and opinions expressed in this article are those of the author and do not necessarily reflect the thought or position of Findex (Aust) Pty Ltd trading as Crowe Australasia.  

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