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 775-55(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?
Registered
11 February 2015
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
Walter Gianotti, Tax Counsel Network
Phone: (08) 9268 5459
Walter.Gianotti@ato.gov.au
[3765] Transfer pricing rules and debt/equity tests
Title
Final Taxation Determination
Income tax: can the debt and equity rules in Division 974 of the Income Tax Assessment Act 1997 limit the operation of the transfer pricing rules in Subdivision 815-B of the Income Tax Assessment Act 1997?
Registered
15 July 2016
Purpose
The final Determination will provide the Commissioner’s view on whether Division 974 can limit the operation of Subdivision 815-B.
Expected completion
Mid 2019
Comments
Draft TD 2018/D6 published 31 October 2018.
Contact
Kevin O'Shaughnessy, Public Groups and International
Phone: (03) 9275 2571
Kevin.O'Shaughnessy@ato.gov.au
[3900] Related party financing – derivatives
Title
Final Schedule 2 to Practical Compliance Guideline PCG 2017/4
Related party derivative financial arrangements
Registered
20 February 2017
Purpose
The final Schedule will set out the risk indicators associated with a financing arrangement, related transaction or contract entered into with cross-border related parties involving ‘derivatives’.
Expected completion
August 2019
Comments
Draft Schedule 2 to PCG 2017/4 published on 1 August 2018. Responses received during consultation have been considered.
Contact
PGIFinancing@ato.gov.au
[3901] Related party financing – interest- free loans
Title
Draft Schedule 3 to Practical Compliance Guideline PCG 2017/4
Interest-free loans between related parties
Registered
June 2016
Purpose
The draft Schedule will set out factors for determining whether an interest-free loan between related parties could be either debt or equity in identifying the arm’s length conditions.
Expected completion
August 2019
Contact
PGIFinancing@ato.gov.au
[3903] Treaty relief on dividends and interest for dual resident individuals
Title
Draft Taxation Determination
Income tax: treaty relief on Australian sourced dividends and interest derived by a dual resident individual who is deemed a resident solely of a foreign country under a double tax treaty
Registered
January 2018
Purpose
The draft Determination will provide proposed clarification of the calculation of the maximum Australian tax chargeable (and any corresponding amount of tax relief available) under a tax treaty on the dividend and interest income of a dual resident individual whose residency is tie-broken solely to a foreign country for tax treaty purposes.
Expected completion
June 2019
Contact
Alex Vourgoutzis, Tax Counsel Network
Phone: (03) 9285 1059
Alex.Vourgoutzis@ato.gov.au
[3906] Thin capitalisation – asset valuations
Title
Draft Practical Compliance Guideline
ATO compliance approach to asset recognition, valuation and revaluation for thin capitalisation purposes
Registered
September 2017
Purpose
The draft Guideline will set out the ATO's proposed compliance approach to taxpayers’ recognition and valuation of assets for the purposes of the thin capitalisation regime in Division 820 of the Income Tax Assessment Act 1997.
Expected completion
To be advised
Comments
Publication of this draft Guideline is subject to the passage of legislation to enact the relevant Budget measure.
Contact
PGIFinancing@ato.gov.au
[3907] Thin capitalisation – mining rights recognition and revaluation
Title
Draft Taxation Determination
Income tax: can a mining, quarrying or prospecting right be revalued in determining the safe harbour debt amount under Division 820 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Registered
September 2017
Purpose
The draft Determination will set out the proposed ATO view relating to the classification and revaluation of a mining right in accordance with accounting standards when applying the thin capitalisation rules contained within Division 820 of the ITAA 1997.
Expected completion
To be advised
Comments
Publication of this draft Determination is subject to the passage of legislation to enact the relevant Budget measure.
Contact
PGIFinancing@ato.gov.au
[3908] Thin capitalisation – bifurcation of financial instruments
Title
Final Taxation Determination
Income tax: thin capitalisation – valuation of debt capital for the purposes of Division 820
Registered
August 2016
Purpose
The final Determination will set out the ATO view relating to the valuation of a taxpayer’s debt capital in accordance with accounting standards when applying the thin capitalisation rules contained within Division 820 of the ITAA 1997.
Expected completion
July 2019
Comments
Draft TD 2018/D4 published on 1 August 2018.
Contact
PGIFinancing@ato.gov.au
[3909] Thin capitalisation – internally generated intangibles
Title
Draft Taxation Determination
Can a taxpayer recognise and revalue their internally generated intangible asset in accordance with the accounting standards for the purpose of the thin capitalisation rules contained in Division 820 of the Income Tax Assessment Act 1997?
Registered
April 2016
Purpose
The draft Determination will set out the proposed ATO view relating to the recognition and revaluation of internally generated intangible assets in accordance with accounting standards when applying the thin capitalisation rules contained within Division 820 of the ITAA 1997.
Expected completion
To be advised
Comments
Publication of this draft Determination is subject to the passage of legislation to enact the relevant Budget measure.
Contact
PGIFinancing@ato.gov.au
[3910] Thin capitalisation – arm’s length debt test
Title
Final Taxation Ruling
Income tax: thin capitalisation – the arm’s length debt test
Registered
July 2016
Purpose
The final Ruling will set out the ATO view on the application of the arm’s length debt test for the thin capitalisation regime.
Expected completion
To be advised
Comments
Draft Taxation Ruling TR 2019/D2 published on 5 April 2019. Comments period closes on 31 May 2019.
Title
Draft Practical Compliance Guideline
Thin capitalisation: arm's length debt test
Registered
October 2018
Purpose
The draft Guideline will set out the ATO's proposed compliance approach to taxpayers' use of the arm's length debt test for the purposes of the thin capitalisation regime in Division 820 of the Income Tax Assessment Act 1997. This will include a schedule outlining risk indicators for the correct application of the arm's length debt test.
Expected completion
August 2019
Contact
Cindy Perryman, Public Groups and International
Phone (03) 8632 5684
Cindy.Perryman@ato.gov.au
[3913] Thin capitalisation – what type of costs are debt deductions within the scope of subparagraph 820-40(a)(iii) of the ITAA 1997?
Title
Final Taxation Determination
Income tax: what type of costs are debt deductions within the scope of subparagraph 820-40(1)(a)(iii) of the Income Tax Assessment Act 1997?
Registered
December 2017
Purpose
The final Determination will set out the ATO view relating to what the Commissioner considers to be costs directly incurred in relation to a taxpayer’s debt capital that are within the scope of subparagraph 820-40(1)(a)(iii) for the purposes of applying the thin capitalisation rules contained within Division 820 of the ITAA 1997.
Expected completion
July 2019
Comments
Draft TD 2018/D5 published on 1 August 2018.
Contact
PGIFinancing@ato.gov.au
[3926] Transfer pricing – cross-border leasing
Title
Draft Practical Compliance Guideline
ATO compliance approach to transfer pricing issues associated with cross-border leasing of foreign residence vessels in Australia (LILO)
Registered
June 2018
Purpose
The draft Guideline will provide proposed practical guidance on the application of the transfer pricing provisions to cross-border leasing of vessels into Australia, by setting out the ATO's proposed compliance approach to transfer pricing issues relating to the use of mobile offshore drilling units (MODUs), such as drill-ships, drilling rigs (including but not limited to submersibles, semi-submersibles and jack-up rigs), pipe-laying vessels (PLVs) and heavy-lift vessels (HLVs).
Expected completion
To be advised
Contact
Reuben Pace, Public Groups and International
Phone: (03) 8632 5985
Reuben.Pace@ato.gov.au
[3932] Taxing US and UK resident financial institutions under US and UK taxation conventions
Title
Final Addendum 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
Registered
July 2018
Purpose
The final Addendum 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
August 2019
Comments
The draft consolidation for TR 2005/5 published on 28 November 2018. Comments period closed on 11 January 2019. We are considering comments and issues raised during consultation.
Contact
James Campbell, Public Groups and International
Phone: (02) 9374 8955
James.Campbell@ato.gov.au
[3944] Prevention of treaty abuse
Title
Draft Practical Compliance Guideline
Prevention of treaty abuse: the principal purpose test
Registered
October 2018
Purpose
The draft Guideline will explain our proposed approach to administering the principal purpose test in a tax agreement that has been modified by the enactment of the Multilateral Instrument.
Expected completion
September 2019
Title
Draft Law Administration Practice Statement
Applying the OECD's MLI Article 7 on the prevention of treaty abuse
Registered
October 2018
Purpose
The draft practice statement will provide proposed guidance to assist our staff in applying the principal purpose test and therefore deny a benefit under a covered tax agreement, or to rule on the application of the principal purpose test in a private ruling, class ruling or product ruling. The draft practice statement will also outline the proposed role and operation of the General Anti-Avoidance Rules Panel in relation to the principal purpose test.
Expected completion
June 2019
Contact
TaxTreaties@ato.gov.au
[3946] Offshore shipping service hubs
Title
Final Schedule 3 to Practical Compliance Guideline PCG 2017/1
Offshore shipping service hubs
Registered
October 2018
Purpose
The final Schedule will set out practical administration approaches to assist taxpayers to comply with their transfer pricing obligations, and allows taxpayers to self-assess their transfer pricing risk for certain types of offshore shipping service hub arrangements.
Expected completion
June 2019
Comments
Draft Schedule 3 to PCG 2017/1 published on 8 November 2018. Comments period closed on 21 December 2018.
Contact
offshorehubs@ato.gov.au
[3950] OECD hybrid mismatch rules
Title
Final Law Companion Ruling
OECD hybrid mismatch rules – concept of structured arrangement
Registered
October 2018
Purpose
The final Ruling will provide the Commissioner's view in relation to the terms 'structured arrangement' and 'party to the structured arrangement' set out in section 832-210 of the Income Tax Assessment Act 1997.
Expected completion
To be advised
Comments
Draft LCR 2018/D9 published on 19 December 2018. Comments period closed on 15 February 2019.
Contact
HybridMismatches@ato.gov.au
Title
Final Practical Compliance Guideline
OECD hybrid mismatch rules – concept of structured arrangement
Registered
December 2018
Purpose
The final Guideline will provide practical guidance to assist taxpayers assessing the risk of the hybrid mismatch rules applying to their circumstances, in particular in relation to the concept of ‘structured arrangement’ in section 832-210 of the Income Tax Assessment Act 1997.
Expected completion
To be advised
Comments
Draft PCG 2018/D9 published on 19 December 2018. Comments period closed on 15 February 2019.
Contact
HybridMismatches@ato.gov.au
Title
Final Law Companion Ruling
OECD hybrid mismatch rules – targeted integrity rule
Registered
October 2018
Purpose
The final Ruling will provide the Commissioner's view in relation to the hybrid mismatch targeted integrity rule in Subdivision 832-J of the Income Tax Assessment Act 1997.
Expected completion
To be advised
Comments
Draft LCR 2019/D1 published on 5 April 2019. Comments period closed on 10 May 2019.
Contact
HybridMismatches@ato.gov.au
Title
OECD hybrid mismatch rules – foreign law interactions
Registered
October 2018
Expected completion
To be advised
Comments
We are currently considering options for the format of the consultation we will conduct in relation to foreign law interactions with Division 832.
Contact
HybridMismatches@ato.gov.au
We are developing advice and guidance on the following international issues.