Draft Practical Compliance Guideline PCG 2026/D1 Thin capitalisation – attribution of risk-weighted assets to Australian branches of foreign banks – ATO compliance approach is now available on our legal database for public comment.
This guideline:
- addresses a thin capitalisation issue impacting foreign banks that conduct their banking business in Australia through a branch
- outlines our approach to determining the risk-weighted assets (RWA) attributable to a branch for the purposes of the thin capitalisation rules for inbound banks in section 820-405 of the Income Tax Assessment Act 1997
- builds on feedback we received about discussion paper, Thin capitalisation – attribution of risk weighted assets to Australian branches of foreign banks
- highlights several other tax issues you should actively consider relevant to assigning a location to assets.
To review the draft PCG and find out how to submit your comments, see PCG 2026/D1. Comments are due by 8 May 2026.
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