CA ANZ has lodged a submission draft legislation to implement thin capitalisation changes announced in the October 2023 Budget. Some key points in the submission include:

• in the current environment of increasing interest rates, Treasury should consider at least providing a transitional period so that entities can restructure their existing financing arrangements to fit within the new rules.
• the proposal to deny deductions for interest expenses incurred in deriving foreign equity distributions be abandoned.
• the fixed ratio and group ratio tests should be adjusted for practicality of application
• the external third party requirements should be adjusted to ensure the external third party debt test is more practical, and some flexibility provided for what happens in normal commercial practice.