Australia recently reduced the safe harbor rule for thin capitalization limit from 75% to 60%, corporate groups may want to consider what steps to take with respect to their thin capitalization positions. With effect from 1 July 2014 the permitted debt to equity ratio has been reduced from 3:1 to 1.5:1 (from 75% to 60% of adjusted Australian assets) for non-banking entities and from 20:1 to 15:1 for banks.
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