On 18 October 2023, the Australian Treasury Department opened a consultation on an exposure draft bill to amend the interest limitation rules. 

As part of the 2022-23 Budget, an integrity measure was announced to address risks to Australia’s domestic tax base stemming from the use of excessive debt deductions. This measure strengthens Australia’s thin capitalisation rules in line with the Organisation for Economic Cooperation and Development (OECD)’s best practice guidance.

The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Bill 2023 giving effect to this measure was tabled in Parliament on 22 June 2023. The Bill was referred to the Senate Economics Legislation Committee.

In line with the Committee’s final report, the government has now prepared exposure draft parliamentary amendments to ensure the new thin capitalization rules are appropriately targeted. The Australian government is seeking stakeholders’ views on the exposure draft parliamentary amendments and accompanying supplementary explanatory material amending the proposed legislation.

The consultation period ends on 30 October 2023.