Improving the integrity of the thin capitalisation rules

Closes on Friday 17 August

In the 2018-19 Budget, the Government announced that it will implement two changes to improve the integrity of Australia’s thin capitalisation rules. The changes are:

  • requiring entities to align the value of their assets for thin capitalisation purposes with the value included in their financial statements; and
  • ensuring that foreign controlled Australian consolidated entities and multiple entry consolidated groups that have foreign operations are treated as both outward and inward investing entities.

The changes apply from income years commencing on or after 1 July 2019.

The Government has released for public consultation exposure draft legislation and accompanying explanatory material for these changes. The release of the exposure draft legislation follows the publication of the statement of policy intent for the valuation of assets on the Treasury website.

The Government invites interested parties to make a submission.

(Source: Australian Treasury)


Stapled structures – Integrity conditions for transitional rules and infrastructure concession

Closes on Tuesday 14 August

On 28 June 2018, the Government released a policy paper for public consultation on the additional integrity rules that will apply to stapled entities that access the infrastructure concession and/or transitional arrangements.

The Government has released for public consultation exposure draft legislation and explanatory material giving effect to the announced measures. The conditions include:

  • The extension of existing integrity rules that apply to Managed Investment Trusts (MITs) to ensure that all staples eligible for the transition rules or the infrastructure concession are required to comply with the existing non arm’s length income rule; and
  • The introduction of statutory caps on the amount of cross-staple rent that is able to access the concessional 15 per cent rate of withholding tax (available under the MIT regime) for economic infrastructure projects during the transition or concession period.

Interested parties are invited to comment on this consultation.

(Source: Australian Treasury)

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