Understanding thin capitalisation

Australia's thin capitalisation rules apply to:

  • Australian entities investing overseas and their associate entities
  • foreign entities investing in Australia.

If you answer 'yes' to any of the questions below, or there is a possibility the rules could apply, read this publication to work out whether you are affected by the thin capitalisation rules.

  • Do you carry on business outside of Australia?
  • Do you control a foreign entity by having at least a 10% interest in a foreign entity (this includes direct and indirect interests and interests held by associate entities) or otherwise have substantive control of a foreign entity?
  • Are you associated with anyone who does carry on a business outside of Australia or has at least a 10% interest in a foreign entity?
  • Is your Australian entity controlled by foreign entities, either directly or indirectly?
  • Are you a foreign entity that has investments in Australia?

When considering if the thin capitalisation rules affect you, you need to look at:

Last modified: 09 Mar 2016QC 48109