Australia: Guidance on thin capitalization rules, franked distributions, insurance premiums paid to nonresident insurers
Guidance includes draft income taxation ruling, draft practical compliance guideline, and draft practical compliance guideline update
The Australian Taxation Office (ATO) today released the following draft guidance:
- Draft income taxation ruling on the “third party debt conditions” an entity must meet to satisfy the new third party debt test in the thin capitalization provisions (TR 2024/D3) (read a December 2024 report prepared by the KPMG member firm in Australia)
- Draft practical compliance guideline update to Schedules 3 and 4 relating to the third party test under the thin capitalization provisions and restructuring in response to the thin capitalization provisions, respectively (PCG 2024/D3)
- Draft practical compliance guideline on the integrity measure relating to capital raised for the purpose of funding franked distributions (PCG 2024/D4)
The ATO also issued guidance on its website on the application of Division 15 to insurance premiums paid to nonresident insurers.