Australia: Final guidance on application of anti-avoidance rules to restructuring transaction in response to thin capitalization rules
Guidance applies to transactions entered into on or after June 22, 2023
The Australian Taxation Office (ATO) on August 20, 2025, released final guidance on application of anti-avoidance rules to restructuring transactions in response to the thin capitalization and debt deduction creation rules (DDCR) (PCG 2025/2).
In particular, PCG 2025/2 outlines the ATO’s compliance guidance on the application of the general anti-avoidance rule (Part IVA) and the DDCR specific anti-avoidance provision (section 820-423D) to such restructuring transactions.
Note that Schedule 3 of PCG 2025/2 dealing with the third-party debt test (TDPT) ruling has not yet been finalized, but the ATO states that it, along with the TDPT ruling, will be finalized later this year.
PCG 2025/2 applies to transactions entered into on or after June 22, 2023.
Read an August 2025 report prepared by the KPMG member firm in Australia