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ARTICLE · 07 MARCH 2024

Earnings-Based Thin Cap Rules – State Of Play

Alvarez & Marsal
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This A&M Tax Brief summarises the current state of play for the new Australian thin cap rules, noting that the most recent amendments (circulated by the Government in November 2023)...

AustraliaCorporate/Commercial Law
Sean Keegan
Sean Keegan
Neil Pereira
Neil Pereira
Tim Frew
Tim Frew
Patrick Graham
Patrick Graham

This A&M Tax Brief summarises the current state of play for the new Australian thin cap rules, noting that the most recent amendments (circulated by the Government in November 2023) were approved by the senate committee and recommended to be passed as-is.

The new rules are already in effect, although they have not been formally passed by parliament – that is, for taxpayers whose income years have commenced on or since 1 July 2023.

Our analysis below reflects the state of the new thin cap rules, including the latest Government amendments.

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A&M Perspective

Under the rules (as drafted), a key issue including for corporate Merger & Acquisition (M&A) transactions will be the DDCR, which is a targeted new rule that can deny deductions on many kinds of common commercial arrangements between related parties, such as:

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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