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In the 2013-14 Budget, the Government identified a number of areas of the corporate tax system that would require closer examination and consultation and as a result, commissioned the Board of Taxation to undertake two reviews.

In media release No 2013/101, issued 4 June 2013, the Assistant Treasurer and Minister Assisting for Deregulation, David Bradbury, announced the terms of reference for these two reviews.

The first review will examine the arm's length debt test as it applies to the thin capitalisation rules to make it easier to comply with and administer, and to clarify in what circumstances the test should apply.

"In its current form, the arm's length test imposes high compliance costs on taxpayers and can be difficult for the ATO to administer," the Assistant Treasurer said.

The second review will combine a post-implementation review of the debt and equity rules with a consideration of whether there can be improved arrangements within the Australian tax system to address any inconsistencies between Australia's and other jurisdictions' debt and equity rules that could give rise to tax arbitrage opportunities.

The Board has been asked to provide its report to the Assistant Treasurer by March 2015.

For further information about the thin capitalisation review, go here

For further information about the debt/equity review, go here


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