CANBERRA: The Australian Taxation Office (ATO) has publicly made it very clear there is intense focus on crossborder related party financing arrangements. Multinational taxpayers will now have more information to self-check the ATO assessment of tax risk associated with their related party financing arrangements.
This new ATO guidance has been released in the form of a Practical Compliance Guideline. This guidance sets out a multifaceted framework for how the ATO differentiates risk (according to six colour-coded risk zones) and how it tailors its compliance approach according to the features of the related party financing arrangement, the profile of the parties and the choices and behaviours of the multinational group. If your related party financing arrangement falls outside the low risk category, you can expect the Commissioner of Taxation will monitor, test and/or verify the tax outcomes of your related party financing arrangement. The higher the risk rating, the more likely an arrangement will be subject to specific ATO review and scrutiny.
