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New thin capitalisation legislation introduced into Parliament

New thin capitalisation legislation introduced into Parliament

Last month, legislation was introduced to Parliament that significantly rewrites Australia’s thin capitalisation rules with effect from 1 July 2023, with no grandfathering or transitional rules. The new regime will replace the current asset-based test with an earnings based test that limits net debt deductions to 30% of tax EBITDA.

The legislation includes major changes from the March exposure draft, including the introduction of a previously unannounced anti-avoidance provision that has extremely broad application. Entities subject to thin capitalisation may be significantly impacted by the new rules and should urgently consider how their financing arrangements are going to be affected.

In this webinar, the presenters will:

  • Explain how each of the three new earnings based tests will operate and their impact on the deductibility of interest and other financing costs
  • Explore options available under the new rules
  • Identify issues raised by the new provisions that need to be considered

The information presented in this webinar was accurate at the time of recording, 26 July 2023.
This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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Michael Lane

Michael Lane

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Nigel Fischer

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Ashley Davidson

Ashley Davidson

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Peter Lawrence

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Leon Mok

Leon Mok

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Howard Badger

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