• Taxpayer Alert – Related party foreign currency denominated finance with related party cross-country interest rate swaps

    Related party cross-country interest rate swap agreements are attracting our attention.

    Read our Taxpayer Alert if you have entered into, or plan on entering into, such an arrangement.

    Our concerns

    Multinational companies are using related party dealings to inappropriately shift profits out of Australia.

    We’ve seen arrangements where the funding has been implemented in an excessively complex manner for Australian tax purposes, rather than in a simpler manner more appropriate in the circumstances.

    In some cases, artificially increasing deductible financing costs has achieved contrived thin capitalisation, withholding tax and transfer pricing outcomes.

    What we’re doing

    We are reviewing these arrangements. In some instances, compliance activities are now underway. We are also developing more information on our technical position.

    What you can do

    You can obtain more detailed information about these types of arrangements and our concerns by reading the Taxpayer Alert.

    We recommend you seek independent advice, review your arrangement or discuss your situation with us by emailing PGIAdvice@ato.gov.au

      Last modified: 26 Apr 2016QC 48789