[4116] Thin capitalisation [updated]
Title
Multinational Tax Integrity – strengthening Australia’s interest limitation (thin capitalisation) rules
Purpose
On 8 April 2024, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share-Integrity and Transparency) Act 2024 (the Act) received Royal Assent.
The ATO is proposing to provide guidance setting out the Commissioner’s views on, and approach to, key aspects of the new thin capitalisation and debt deduction creation rules contained in Schedule 2 of the Act.
Consultation on potential guidance topics, prioritisation and form closed on 30 April 2024. On 10 May 2024, we published a summary of PAG topics, outlining topics raised by stakeholders and how these will be prioritised.
The high-priority topics we intend to resource immediately are:
- restructures in response to the new law
- third-party debt test – key concepts, and
- interaction of transfer pricing and the new thin capitalisation rules.
We continue to engage with stakeholders on the high-priority topics to develop specific public advice and guidance products. We encourage stakeholders to provide specific, practical examples that clearly demonstrate issues raised, including reference to the relevant provisions and analysis of their potential application.
Expected completion date
Consultation on potential guidance topics, prioritisation and form closed on 30 April 2024.
The expected completion date of publication of proposed public advice and guidance will be determined thereafter.
Contact
Stephen Dodshon, Public Groups
Erin Gordon, Office of the Chief Tax Counsel
For more information, see Consultation matter [202401].
Title
Web guidance
Thin capitalisation guide
Purpose
On 8 April 2024, the Act received Royal Assent. Schedule 2 of the Act amends the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 to update Australia’s thin capitalisation rules.
We are updating the Thin capitalisation guide on ato.gov.au to reflect these amendments. New content will be incorporated to address changes to entity classification and the introduction of 3 new thin capitalisation tests.
Expected completion date
July 2024.
Contact
Nick Trotman, Public Groups
[4144] Inbound related-party financing for private groups in the property and construction industry [updated]
Title
Web guidance
Inbound related-party financing for private groups in the property and construction industry
Purpose
This guidance will help privately owned and wealthy groups in the property and construction industry comply with their obligations and mitigate tax risks associated with their inbound related-party financing arrangements. It will be accompanied by examples of inbound related-party financing arrangements on the ATO Legal database.
Expected completion date
August 2024.
Comments
We will be consulting with external stakeholders and industry groups to seek feedback on the proposed guidance and examples.
Contact
Lynette Purcell, Private Wealth International Program
Phone: (08) 9268 6091
For more information, see Consultation matter [202408].
[4149] OECD hybrid mismatch rules
Title
Final Taxation Determination
Income tax: application of certain aspects of the ‘liable entity’ and ‘hybrid payer’ definitions
Purpose
The final Determination will set out the Commissioner’s view on certain aspects of the ‘liable entity’ and ‘hybrid payer’ definitions in Division 832 of the Income Tax Assessment Act 1997.
Comments
Draft Taxation Determination TD 2024/D1 Income tax: hybrid mismatch rules − application of certain aspects of the ‘liable entity’ and ‘hybrid payer’ definitions published on 13 March 2024. Comments period closed 19 April 2024.
Expected completion date
July 2024.