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

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August 21, 2025

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

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