On 8 April 2024, the Australian Taxation Office (ATO) declared additional consultations about the guidance for the new thin capitalization rules by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share-Integrity and Transparency) Act 2024. The regulations were officially enacted on 8 April 2024 after receiving Royal Assent.
The ATO proposes providing guidance on 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. Stakeholder feedback is sought on potential topics, prioritization, and any form of public advice and guidance.
It is intended that only the most important issues arising from the new law will be addressed through the preparation of early ATO public advice and guidance. Since commencing our consultation in January 2024, stakeholders have raised a broad range of topics.
Generally, stakeholders have focused on:
- issues relating to the application of the third-party debt test;
- the interaction between the transfer pricing rules and the thin capitalization rules;
- the application of the general anti-avoidance rules and the provision of the specific scheme in the debt deduction creation rules to certain restructures.
The consultation on potential guidance topics, prioritization, and form will close on 30 April 2024.
The expected completion date of publication of proposed public advice and guidance will be determined thereafter.
