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  • Advice under development – international issues

    We are developing advice and guidance on the following international issues.

    [3708] Forex realisation event 4

    Title
    Draft Taxation Determination
    Income tax: does forex realisation event 4 happen to the debtor under subsection 775-5(1) of the Income Tax Assessment Act 1997 on repayment of a loan taken out prior to the effective date of a choice to use the applicable functional currency and denominated in the same non-Australian dollar currency that later becomes the applicable functional currency?

    Purpose
    The draft Determination will set out proposed clarification on whether forex realisation event 4 happens on repayment of a loan obligation incurred prior to the effective date of an applicable functional currency choice and denominated in the same non-Australian dollar currency that later becomes the applicable functional currency.

    Expected completion
    To be advised

    Contact
    Erin Gordon, Office of the Chief Tax Counsel
    Phone: (08) 9268 5353
    Erin.Gordon@ato.gov.au

    [3932] Taxing US and UK resident financial institutions under US and UK taxation conventions

    Title
    Final update to Taxation Ruling TR 2005/5
    Income tax: ascertaining the right to tax United States (US) and United Kingdom (UK) resident financial institutions under the US and the UK Taxation Conventions in respect of interest income arising in Australia

    Purpose
    The final update will clarify certain aspects of the second limb of the definition of 'financial institution', which is used in Australia's double-tax conventions with the US and the UK.

    Expected completion
    March 2023

    Comments
    A draft update to TR 2005/5 published on 28 November 2018. Following further consideration, subsequent draft update TR 2005/5DC2 published on 28 September 2022. Comments period closed on 11 November 2022.

    Contact
    James Campbell, Public Groups and International
    Phone: (02) 9374 8867
    James.Campbell@ato.gov.au

    [3950] OECD hybrid mismatch rules

    Title
    Hybrid mismatch rules – subject to foreign income tax

    Purpose
    This guidance will address the Commissioner’s view on key aspects of the ‘subject to foreign income tax’ definition, with particular focus on treatment of intra-group payments between members of the same US consolidated group.

    Expected completion date
    Mid 2023

    Contact
    Hybridmismatches@ato.gov.au

    [4006] Intangibles arrangements

    Title
    Final Practical Compliance Guideline
    Intangibles arrangements

    Purpose
    The final Guideline will set out the ATO's compliance approach to international arrangements connected with the development, enhancement, maintenance, protection and exploitation of intangible assets; specifically, the potential application of the transfer pricing, general anti-avoidance rule (GAAR) and the diverted profits tax (DPT) provisions. The capital gains tax and capital allowances provisions will also be discussed in this Guideline where these may be considered alongside, or relevant to, the ATO’s transfer pricing, GAAR or DPT risk assessment.

    Expected completion
    Early 2023

    Comments
    We have decided to make further changes based on feedback received through the consultation process and internal review. We anticipate undertaking targeted consultation with stakeholders who provided submissions on draft PCG 2021/D4 in earlier consultation.

    Contact
    IntangiblesArrangements@ato.gov.au

    For more information, see Consultation matter [202017].

    Last modified: 28 Nov 2022QC 50317