Jenny Wong discusses the Australian Taxation Office's focus on financing with accrued deductions and withholding tax deferral or avoidance.
The Australian Taxation Office (ATO) is focussing on financing arrangements that result in accrued deductions and also withholding tax deferral or withholding tax avoidance.
In Taxpayer Alert 2018/4, released on 20 December 2018, the ATO has advised that it is reviewing inbound cross-border financing arrangements that have the following features:
The ATO has indicated that in order for it to accept that such an arrangement is low risk, the taxpayer should be able to convincingly demonstrate with evidence that deferral of the entitlement to interest is driven by commercial non-tax factors and that withholding tax is paid when the interest entitlement becomes due.
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