Tax Bites EP16: Thin capitalisation update: The Third Party Debt Test and Recent ATO Draft Guidance PCG 2025/D2
In this episode of the Herbert Smith Freehills Kramer 'Tax Bites' podcast, host Toby Eggleston alongside Professor Graham Cooper and fellow partner Ryan Leslie, explore the complexities of the third party debt test as it relates to Australia's thin capitalisation rules.
Key discussions include the overview and operational intricacies of the third party debt test introduced to replace the arm's length debt test, the guidance and issues arising from the ATO, and the impact of these changes on the infrastructure and property sectors. Special segments also cover the ATO's draft practical compliance guidelines on related party financing and the tax risk associated with the quantum of debt. In addition, the episode highlights updates on Section 899, U.S. tax policy interactions, and a farewell to fan favourite, Graeme Cooper after his substantial contributions to the firm.
00:10 Introduction and Welcome
00:54 Overview of Thin Capitalisation Rules
02:56 Third Party Debt Test Explained
06:11 Emerging Issues with Third Party Debt Test
12:34 Practical Challenges and Industry Reactions
20:14 Conduit Financing and Swap Costs
28:04 Draft Practical Compliance Guide (PCG) PCG 2025/D2
44:01 Closing Remarks and Farewell
Herbert Smith Freehills Kramer Podcasts · Tax Bites EP16: Thin capitalisation update
Tax Bites EP15: Understanding Section 899: US retaliatory tax measures and the impact on Australian taxpayers
In this episode of the Herbert Smith Freehills Kramer Tax Bites podcast, hosts Toby Eggleston and Professor Graham Cooper discuss the significant implications of the proposed Section 899 under President Trump's 'One Big, Beautiful Bill' Act. They delve into how these retaliatory taxes imposed by the US aim to counteract what are perceived to be unfair or discriminatory foreign taxes, particularly affecting Australian companies. The discussion covers the legislative background, specific unfair taxes such as undertaxed profits rules, digital services taxes, and diverted profits taxes. They also explore the potential consequences for Australian taxpayers, the Australian government's actions, and the broader impact on the international tax regime.
00:10 Introduction and Greetings
00:31 Overview of Section 899 and Its Implications
00:56 Background and Legislative Process
01:52 Impact on Australian Firms and Government
05:26 Unfair Foreign Taxes Defined
10:29 Potential Triggers and Affected Taxes
11:53 Impact on Australian Taxpayers and Government
16:52 Modifications to BEAT Rules
20:50 Treaty Interactions and Future Implications
23:23 Conclusion and Final Thoughts
Herbert Smith Freehills Kramer Podcasts · Tax Bites EP15: Understanding Section 899: US retaliatory tax measures
Tax Bites EP14: Election Season Tax Policy Updates and Impact on Businesses
In this episode of the Herbert Smith Freehills Tax Podcast, partner Toby Eggleston and consulting Professor Graham Cooper discuss recent tax policy announcements from both major political parties in light of the upcoming election. They focus on measures affecting large businesses, small businesses, and individuals and on unenacted measures and the implications of these policies for businesses and taxpayers. also touch on the impact of global tax trends, specifically the OECD's pillar one and pillar two frameworks.
00:10 Introduction and Welcome
00:37 Election Cycle Updates
01:50 Tax Proposals for Individuals
08:49 Tax Proposals for Small Businesses
15:15 Venture Capital and Fuel Excise
18:01 Unenacted Measures and Future Proposals
28:47 Conclusion and Final Thoughts
Herbert Smith Freehills Podcasts · Tax Bites EP14: Election Season Tax Policy Updates and Impact on Businesses
To view the full article, click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
