In April 2024, Australia’s new thin capitalisation rules become law (see here).
Broadly, thin capitalisation applies to entities part of multinational groups that incur debt deductions (e.g. interest) of more than $2 million for an income year (on a group basis).
The legislation also introduced new integrity measures known as the debt deduction creation rules. The ATO published a draft practical compliance guideline (PCG 2024/D3) outlining their views as to how some aspects of the rules work and the likelihood of the ATO devoting compliance resources to further examine groups that have restructured their affairs in response to the new rules.
Pitcher Partners have been extensively consulting with the ATO on these measures to advocate for middle market taxpayers by seeking a broader set of criteria by which taxpayers can self-assess their arrangements as “low-risk” and we made a comprehensive submission in response to the draft PCG.
You can read our submission below.
Appendices:
PCG 2024_D3 Submission Appendix A
PCG 2024_D3 Submission Appendix B
