Australia's new thin capitalization regime

The new thin capitalization legislation, enacted in October 2001, substantially changed the application of the thin capitalization provisions to the Australian operations of multinational groups - both inbound and outbound. The new thin capitalization rules are extremely complex and traverse a wide variety of taxpayers and financial interests. This article provides a general overview of the new rules and covers the main points. The article also makes specific observations on the application of the new rules.