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Australia Tightening Tax Consolidation Regime

by Mary Swire, Tax-News.com, Hong Kong

15 February 2018


The Australian Government is legislating to close loopholes in the tax consolidation regime.

Tax consolidation allows wholly owned corporate groups to be treated as a single entity for tax purposes.

Under the current rules, multinational consolidated groups can, in some circumstances, achieve tax-free gains on assets by transferring entities between non-resident associates.

The Government is legislating to prevent multinational groups from sheltering future income tax by "churning" entities between related parties.

In addition, the legislation will close a loophole that currently allows access to double deductions.

The legislation also aims at preventing double benefits from arising from securitized assets and at ensuring that the tax treatment of certain assets and liabilities is consistent with economic substance. It will remove a double tax benefit currently arising from the treatment of deductible liabilities and simplify the rules by disregarding deferred tax liabilities.

There are around 12,000 tax consolidated groups in Australia.

TAGS: compliance | tax | tax compliance | corporation tax | Australia | legislation | tax planning | transfer pricing | tax breaks | tax reform | Tax | BEPS

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