Bloomberg Tax
Sept. 9, 2020, 4:02 AM

Interest-Free Foreign Loans Raise Risk of Australian Tax Audits

Rossella Brevetti
Rossella Brevetti

Multinationals in Australia should reassess their loan arrangements with foreign subsidiaries to ensure they aren’t in danger of being audited or penalized for not meeting standards recently spelled out by tax authorities.

The Australian Taxation Office published criteria earlier this month for determining a company’s risk level for an audit of their interest-free loan transactions. Companies can use the criteria, published in the agency’s draft compliance guidelines, to assess if they are at low or high risk of audits.

Practitioners advise companies to review their arrangements in view of the guidance and keep contemporaneous documentation and evidence to support ...

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