1 August 2018

Ensuring all multinationals pay their fair share of tax


Today the Turnbull Government released draft legislation for public consultation that cracks down on foreign entities leveraging their debt to reduce the amount of tax they pay in Australia.

The thin capitalisation rules prevent multinationals from shifting profits offshore by using excessive levels of tax deductible debt to fund their Australian operations.

This measure was announced in the 2018‑19 Budget and is designed to improve the integrity of the thin capitalisation rules.

The draft legislation requires entities to align the value of their assets for thin capitalisation purposes with the value of their assets in their financial statements.

This will further reinforce the Government's commitment to the integrity of Australia's tax system and ensure multinationals pay their fair share of tax.

Submissions to the draft legislation and explanatory materials close on Friday, 17 August 2018.

Stakeholders are invited to obtain a copy of the draft legislation or provide their feedback on the Treasury website.