Thin capitalisation asset valuation law changes – ATO administrative treatment

Thin capitalisation asset valuation law changes

Tax returns now required to be lodged based on new law, but transitional relief may still apply if conditions are met.


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The Australian Taxation Office (ATO) has set out its administrative treatment for income tax returns impacted by law changes to thin capitalisation asset valuation rules.

The rules, which require entities to align the value of their assets for thin capitalisation purposes with the value included in their financial statements, are contained in the Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Act 2019 which received Royal Assent on 13 September 2019.

ATO administrative treatment

Tax returns lodged according to the previous rules were accepted by the ATO up until the time the law was passed by Parliament. Royal Assent was received on 13 September 2019 meaning the opportunity to lodge under the previous rules has now passed.

Tax returns will now need to be lodged according to the new rules. If tax returns are lodged based on the previous rules, an amendment will be necessary where the outcome is different.

To read more about thin capitalisation asset valuation law changes, please log on to KPMG Tax Now.

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