Ref: AMK:lg
14 February 2025
Stephen Dodshon Australian Taxation Office
By Email: Stephen.Dodshon@ato.gov.au Dear Stephen TR 2024/D3 – ASPECTS OF THE THIRD PARTY DEBT TEST PCG 2024/D3 – RESTRUCTURES AND THE THIN CAPITALISATIONS AND DEBT DEDUCTION CREATION RULES 1.
Thank you for the opportunity to provide comments on the Draft Taxation Ruling TR 2024/D3 (“Draft Ruling”) in relation to the application of the third party debt test (“TPDT”) in Subdivision 820-EAB of the Income Tax Assessment Act 19971 and Draft Practical Compliance Guideline PCG 2024/D3 (“Draft PCG”) about restructures relating to the thin capitalisation and debt deduction creation rules.
2.
Pitcher Partners specialises in advising taxpayers in what is commonly referred to as the middle market. Accordingly, we service many taxpayers that would be impacted by the ATO’s interpretation of how the TPDT applies.
3.
We welcome the ATO releasing detailed guidance on its interpretation of various aspects of the TPDT as well as practical solutions for administering the provisions in the initial years of their application. Many of the interpretations in the Draft Ruling and administrative practices in the Draft PCG are sensible and consistent with our understanding of the rules.
4.
We note that there are certain aspects of the Draft Ruling that we believe require further explanation, examples or commentary to properly articulate the ATO view on key matters. We have highlighted these items in this submission. There are also aspects contained within the Draft Ruling that we do not agree with and believe that they may constitute positions that are unlikely to be upheld if there were to be challenged by litigation.
1
All legislative references in this document are to this Act unless otherwise stated.
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