On 24 January 2018, the Australian Taxation Office (ATO) issued the Practical Compliance Guideline (PCG) 2018/1. This Guideline sets out how the ATO will administer subsection 820-300(3) of the Income Tax Assessment Act 1997 (ITAA 1997) in the context of a taxpayer’s calculation of its ‘adjusted average equity capital’.
This Guideline consists of two parts. Part A is concerned with the attribution of ADI equity capital to a permanent establishment (PE) for the purposes of paragraph 820-300(3)(a). Part B is concerned with the attribution of controlled foreign entity equity to a PE for the purposes of paragraph 820-300(3)(b).
This Guideline will apply from first income year that commences after the Guideline’s date of issue.
