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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

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March 25, 2026

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. 

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