2023 Anti-avoidance

The proposed intangibles anti-avoidance rule

Published Date: 1 Jul 2023


In March 2023, Treasury released exposure draft legislation proposing to amend the Income Tax Assessment Act 1997 (Cth) by introducing a new specific anti-avoidance rule focusing on deductions for payments relating to intangible assets connected with low corporate tax jurisdictions. The proposed rule aims to deny deductions where income from exploiting intangible assets is derived by an associate of a significant global entity in a low or no corporate tax jurisdiction. A literal interpretation of the draft legislative text may result in substantial uncertainty as to whether the rule applies to a taxpayer’s specific circumstances — or, in some cases, it may result in unexpected and surprising results. This article seeks to demonstrate, through three hypothetical examples, that there remains scope for a more balanced construction of the proposed provision to be adopted by reference to the statutory context and overall purpose of the rule.

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2023 Anti-avoidance

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