Australia Provides Guidance on New Debt Deduction Law

Australia is seeking comments on guidelines to rules that limit deductions to multinational companies on interest payments on their debt.

The draft compliance guidelines from the Australian Taxation Office on the so-called thin capitalization rules describe how the anti-avoidance provision of the rules will be applied to certain restructures.

The thin-capitalization rules passed both houses of Australia’s Parliament in March as part of its tax-integrity bill, and were enacted in April.

The risk framework provided in the draft guideline laid out four “zones” that companies could fall under sorted by risk level: “high risk,” “low risk,” “compliance risk not ...