The Australian Taxation Office (ATO) has updated its guidance on thin capitalization to include guidance in relation to COVID-19, including a simplified approach to the arm’s length debt test (ALDT).
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COVID-19 and thin capitalization
The recent disruption brought about by COVID-19 may affect not only taxpayers' compliance with their reporting obligations, but also the underlying economic fundamentals that inform the choice of method for calculating maximum allowable debt for thin capi…