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  • Taxpayer Alert - Accrual deductions and deferral or avoidance of withholding tax

    We recently issued TA 2018/4: Accrual deductions and deferral or avoidance of withholding tax. The alert details certain types of arrangements we are reviewing that involve international related party financing arrangements. We have concerns these arrangements enable taxpayers to inappropriately receive Taxation Of Financial Arrangements (TOFA) deductions while not withholding and remitting interest withholding tax (IWT).

    While some arrangements of this nature will be acceptable, this alert is to advise taxpayers our concerns about contrived and non-commercial arrangements. We believe there are a number of provisions within the existing legislation that could apply to these arrangements, which could result in the imposition of IWT impacting on the availability or timing of deductions in respect of the arrangement. 

    We consulted with external advisors who are noted experts in this area when drafting this alert.

    We encourage anyone who has entered into and contemplating entering into this type of arrangement to email top1000program@ato.gov.au.

    Last modified: 30 Jan 2019QC 57813