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Thin Capitalisation - Is 'Debt' a Dirty Word?

Published on 13 Jun 2007 | Took place at Oaks Hotel on Collins, Melbourne, VIC

Australia's current thin capitalisation regime has now been in place since 2001 and yet many SME taxpayers still find themselves being caught out by the rules each year. More than a decade of low interest rates, an abundance of liquidity and the rapid growth of private equity in the Australian market has resulted in debt becoming an increasingly popular form of funding in Australia. Increased debt levels are beginning to place pressure on the thin capitalisation capacities of many Australian taxpayers and the Australian Taxation Office has announced its intent to focus on this area. Is your understanding of the thin capitalisation rules good enough to be effective in the current environment?

Individual sessions

Thin Capitalisation: Is Debt a Dirty Word?

Author(s):  Anthony KLEIN,  James STRONG

Topics covered in this presentation include:

  • why are thin capitalisation rules necessary?
  • reasons for renewed ATO focus on thin capitalisation
  • to whom do the Australian thin capitalisation rules apply
  • a recap of the key features of the rules
  • different measurement techniques
  • interaction with the debt/equity rules
  • interaction with Part IVA
  • fixing thin capitalisation breaches - some tips and traps
  • completing a thin capitalisation schedule in practice
  • practical case studies.
Materials from this session: