Australia Clarifies Limits of Cross-Border Tax Deductions

Australia has further clarified when it could deny companies cross-border tax payment deductions, with the rules likely to impact more US multinational company transactions amid a crackdown of how global outfits conduct their tax affairs.

The Australian Taxation Office published its final determination Wednesday on its approach to using “hybrid mismatch rules,” with examples to show when a deduction can be denied.

The document clarifies the ATO’s definition of “liable entity” and “hybrid payer” under the rules.

Hybrid mismatches describe when taxpayers exploit differences in countries’ tax treatment of an entity or a financial instrument so as to minimize their ...