The Australian Taxation Office (ATO) has issued a taxpayer alert warning larger businesses to be wary of cross-border financing arrangements established predominantly to claim debt deductions.
Tax Commissioner Mr D’Ascenzo said these arrangements aim to inappropriately reduce taxable income in Australia.
“We have seen attempts to exploit concessions within the tax laws with companies claiming debt deductions to earn foreign non-portfolio dividends using contrived financing arrangements,” D’Ascenzo explained, going on to add:
“Some arrangements we have reviewed are subject to anti-avoidance rules and multinational companies should be very cautious of any arrangement generating claims for debt deductions through artificial receipts of foreign non-portfolio dividends."
“This is an especially timely reminder for those multinational companies whose financial year ends on June 30."
“Careful consideration now should help to avoid tax debts, substantial penalties and interest which may apply from participation in such arrangements in the future," he continued, concluding:
“We are paying close attention to the emergence of these arrangements and will work with industry and the tax profession to address any concerns.”
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