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Safe harbour or “rule of thumb”


The ATO is taking an expansive view of its transfer pricing powers. The release of a new draft ruling on the interaction of the thin capitalisation and transfer pricing rules has implications for all taxpayers with loans or guarantees with cross-border related parties. Taxpayers who have sought the refuge of the thin capitalisation “safe harbour” will still need to calculate a hypothetical gearing structure for a financially independent entity in the position of the taxpayer. This article explores the ATO’s position and the implications it has for non-residents funding their Australian businesses.

Author profile

Paul Korganow
Photo of author, Paul KORGANOW Paul Korganow, ATI, is the ATO Assistant Commissioner for the International Tax Structuring/BEPS Practice, Public Groups and International. Paul leads an International Tax Structuring team based in Melbourne and Sydney. He is also involved in strategy development and contribution to domestic and multilateral law reform around BEPS. Paul is the ATO Project Lead for BEPS Action 2, the Australian ATO representative at OECD Working Party 11 and represented the ATO on the Board of Taxation Working Group looking at the domestic implementation of the OECD Anti-Hybrid Rules. Paul was previously a Partner at two Big 4 firms in their International Tax and M&A groups. - Current at 16 February 2018
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