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:
- thinly capitalised entities
- how the rules work
- control of your entity
- entity categories
- consolidated groups and MEC groups
- average values for maximum debt level or minimum capital level
- electing to use the ADI rules
- the choice to treat specialist credit card institutions as financial entities and not ADIs
- the application to part-year periods.