Australia: Guidance on application of thin capitalization rules to Australian branches of foreign banks
ATO’s compliance approach to determining risk-weighted assets (RWA) attributable to such branches
The Australian Taxation Office (ATO) released PCG 2026/D1, outlining the ATO's compliance approach to determining the risk-weighted assets (RWA) attributable to Australian branches of foreign banks for purposes of applying the thin capitalization rules under section 820-405 of the Income Tax Assessment Act 1997.
The guidance was informed by consultation on the ATO's discussion paper on the issue, which closed on May 31, 2024.