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Thin capitalisation and transfer pricing paper

Published on 09 Feb 10 by NEW SOUTH WALES DIVISION, THE TAX INSTITUTE

In November 2007, the ATO released Draft Tax Determination TD 2007/D20. The draft stated: "..the existence of a safe harbour debt amount for the purposes of Division 820 [Thin Cap] does not prevent the Commissioner from determining an appropriate arm's length cost for all of the debt funding ..". This was followed by the release of a Discussion Paper on "Intra-group finance guarantees and loans" in June 2008, and a number of selected references in 2009 speeches by the Commissioner and other ATO officers.

This paper provides an up-to-date report on subsequent progress, including:

  • a summary of the latest ATO position
  • Division 13 and its interface with other arm's length rules
  • the arm's length principle
  • the tax policy perspective.

Author profile:

Richard Shaddick FTI
Richard is a Director in the Melbourne office of Greenwoods & Freehills. He has specialise in international taxation for many years, especially (since 1990) in the Australian taxation of controlled foreign companies (CFCs). Apart from advising private sector clients in this area, Richard also serves on the Rulings Panel of the Australian Taxation Office, and has consulted extensively with the Treasury Department on the redesign of the CFC legislation. Current at 01 July 2010 Click here to expand/collapse more articles by Richard SHADDICK.
 

This was presented at Current Corporate Tax Issues.

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The international tax interface

Author(s):  Chris MORRIS

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