[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
[4116] Thin capitalisation [updated]
Title
Multinational Tax Integrity – strengthening Australia’s interest limitation (thin capitalisation) rules
Purpose
On 8 April 2024, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share-Integrity and Transparency) Act 2024 received Royal Assent.
The ATO is proposing to provide guidance setting out the Commissioner’s views on, and approach to, key aspects of the new thin capitalisation and debt deduction creation rules contained in Schedule 2 of the Act.
Stakeholder feedback is sought on potential topics, prioritisation and the form of any potential public advice and guidance.
It is intended that only the most important issues arising from the new law will be addressed through the preparation of early ATO public advice and guidance.
Since commencing our consultation in January 2024, stakeholders have raised a broad range of topics. Generally, stakeholders have focused on:
- issues relating to the application of the third-party debt test
- the interaction between the transfer pricing rules and the thin capitalisation rules
- the application of the general anti-avoidance rules and the specific schemes provision in the debt deduction creation rules to certain restructures.
We encourage stakeholders to continue to engage with us on potential guidance topics, the prioritisation of issues, and the appropriate form of guidance. Where relevant, we seek specific, practical examples that clearly demonstrate issues raised, including reference to the relevant provisions and your analysis of their potential application.
Following the completion of this consultation, we will continue to engage with stakeholders on the development of specific public advice and guidance products.
Expected completion date
Consultation on potential guidance topics, prioritisation and form will close on 30 April 2024.
The expected completion date of publication of proposed public advice and guidance will be determined thereafter.
Contact
Stephen Dodshon, Public Groups
Erin Gordon, Office of the Chief Tax Counsel
For more information, see Consultation matter [202401]
[4149] OECD hybrid mismatch rules
Title
Final Taxation Determination
Income tax: application of certain aspects of the ‘liable entity’ and ‘hybrid payer’ definitions
Purpose
The final Determination will set out the Commissioner’s view on certain aspects of the ‘liable entity’ and ‘hybrid payer’ definitions in Division 832 of the Income Tax Assessment Act 1997.
Comments
TD 2024/D1 Income tax: hybrid mismatch rules − application of certain aspects of the ‘liable entity’ and ‘hybrid payer’ definitions published on 13 March 2024. Comments period closes 19 April 2024.
Expected completion date
June 2024.