‘Safe harbour’ no longer – transfer pricing now overrides thin cap

Organisations with inbound-related party funding arrangements will need to consider the arm’s length nature of their capital structure to be compliant with Australia’s transfer pricing provisions, as discussed by Sean Madden and Sam van Berkel.

Treasury has released updated legislation and explanatory materials for the proposed thin capitalisation changes, which were originally announced as part of the Federal Government’s October 2022 budget. The legislation was not passed during the last sitting of Parliament, with the Bill referred to the Senate Economics Legislation Committee, which is due to report on 31 August 2023. However, the new thin capitalisation rules will still apply for income years beginning on or after 1 July 2023...

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Authors: Sean Madden, Sam van Berkel

Published Date: 13 July 2023