02 Nov 066 Treasury Discussion Paper - Application of accounting standards to Thin CapOn 24 January 2005, the Treasurer announced a 3 year transitional period in respect of the application of Australian equivalents to International Financial Reporting Standards (AIFRS) under the thin capitalisation rules in Division 820 of ITAA 1997: see 2005 TAXVINE No 2 (5) (28 January 2005). During this time, entities may elect, on an annual basis, to use either AIFRS or Australian Generally Accepted Accounting Principles (AGAAP) to calculate their thin capitalisation position. In making this announcement, the Treasurer indicated that the Government would examine whether the existing thin capitalisation rules were appropriate following the adoption of AIFRS.
Treasury has now released a Discussion Paper entitled "Thin Capitalisation: application of accounting standards". The purpose of the discussion paper is to raise awareness of the interaction between the adoption of AIFRS and the thin capitalisation rules, and to seek comments on options once the transitional period ends. Comments must be received by the close of business on Friday 8 December 2006.
For a copy of the Discussion Paper, go here