Australia Issues Guidance Reiterating ATO View on Thin Cap Safe Harbor
November 2, 2010 in Transfer Pricing Report
The Australian Taxation Office Oct. 27 finalized guidance reiterating the ATO’s long-held view that it may apply the arm’s-length interest rate to adjust the pricing of related-party debt even when such debt falls within the nation’s thin capitalization safe harbor. [Australian Taxation Office, Ruling 2010/D7, released 10/27/10]
ATO Taxation Ruling 2010/7, which appears in this issue, formalizes a draft ruling issued in December 2009 under which related-party taxpayers may choose to adopt the interest rate paid by their parent company for such debt.
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