The Australian Taxation Office (ATO) will release this year detailed advice and guidance on the country’s thin capitalization regime contained in Division 820 of the Income Tax Assessment Act, 1997.
The ATO said it expects to publish, by April 30 this year, guidance on the classification and revaluation of a mining right in accordance with accounting standards when applying the thin capitalization rules. It will also set out guidance on the valuation of a taxpayer’s debt capital in accordance with accounting standards when applying the thin capitalization rules.
Next, by June 30, 2018, the ATO expects to publish guidance on the ATO’s compliance approach in respect of the taxation outcomes associated with thin capitalization arrangements. This will include a schedule outlining risk indicators for arrangements associated with recognition and revaluation of mining rights, it noted.
By June 30, the ATO will also publish guidance on the recognition and revaluation of internally generated intangible assets in accordance with accounting standards when applying the thin capitalization rules. Finally, the ATO will set out its views on the application of the of the arm’s length debt test.
Guidance is also expected on other key international tax and transfer pricing issues such as transfer pricing and debt and equity rules, diverted profits tax, Multinational Anti-Avoidance Law, related-party derivative financial arrangements, and interest-free loans between related parties.