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