Treasury Laws Amendment (Making Multinationals Pay Their Fair Share-Integrity and Transparency) Bill 2023 - FSC Submission to Treasury on Proposed Amendments

Oct 3, 2026

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Submission by the Financial Services Council (FSC) to Treasury on proposed amendments to the Treasury Laws Amendment Bill 2023 concerning interest limitation (thin capitalisation) rules. The submission contextualizes the FSC’s policy role and outlines additional comments on an exposure draft and explanatory memorandum. It focuses on Schedule 2, especially the debt deduction creation rules, noting concerns about scope, unintended consequences for ordinary transactions, and changes that improve targeting through exemptions and a related party lending exception, plus a one-year grace period for retrospective application.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages7

Reading Time18 min

AccessFree to download

Contents

About the Financial Services Council

Introduction

Schedule 2 – Interest limitation (thin capitalisation) rules

Debt deduction creation rules

Third-party debt test – application to partnerships and trusts

Application of rules to Attribution Managed Investment Trusts

Distributions from trusts

Associate entity test exemption

Treasury Laws Amendment (Making Multinationals Pay Their Fair Share–Integrity and Transparency) Bill 2023 FSC Submission to Treasury on Proposed Amendments October 2023 Contents 1 About the Financial Services Council ....................................................................... 2 2 Introduction .............................................................................................................. 2 3 Schedule 2 – Interest limitation (thin capitalisation) rules ......................................... 3 3.1 Debt deduction creation rules.......................................................................... 3 3.2 Third-party debt test – application to partnerships and trusts .......................... 5 3.3 Application of rules to Attribution Managed Investment Trusts ........................ 5 3.4 Distributions from trusts .................................................................................. 6 3.5 Associate entity test exemption ....................................................................... 6 1 About the Financial Services Council The FSC is a peak body which sets mandatory standards and develops policy for more than 100 member companies in one of Australia’s largest industry sectors, financial services. Our full members represent Australia’s retail and wholesale funds management businesses, superannuation funds, investment platforms and financial advice licensees. Our supporting members represent the professional services firms such as ICT, consulting, accounting, legal, recruitment, actuarial and research houses. The financial services industry is responsible for investing more than $3 trillion on behalf of over 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange, and is one of the largest pool of managed funds in the world. The FSC’s mission is to assist our members achieve the following outcomes for Australians: • to increase their financial security and wellbeing; • to protect their livelihoods; • to provide them with a comfortable retirement; • to champion integrity, ethics and social responsibility in financial services; and • to advocate for financial literacy and inclusion. 2 Introduction The FSC thanks Treasury for the opportunity to provide a submission on proposed amendments to the Treasury Laws Amendment (Making Multinationals Pay Their Fair ShareIntegrity and Transparency) Bill 2023 (the Bill) currently before the Senate. The FSC thanks the Government for its engagement on the proposals and for proposing further refinements to improve Schedule 2 of the Bill (interest limitation or thin capitalisation rules) identified during previous rounds of consultation and the Senate Economics Legislation Committee inquiry (the inquiry) , to which the FSC has previously made submissions.1 The FSC’s submission to Treasury provides additional comment on the proposed exposure draft amendments and explanatory memorandum. 3 Schedule 2 – Interest limitation (thin capitalisation) rules 3.1 Debt deduction creation rules The FSC previously identified a number of concerns with the proposed debt deduction creation rules that were included in the Bill without prior consultation. While our recommendation to remove the provisions subject to a full and comprehensive consultation process was not adopted, we note that the amendments will make some improvements to the Bill and address a number of the concerns identified in our submission to the Senate Committee. While the aim of the Bill was to disallow debt deductions in relation to debt creation schemes that lack genuine commercial justification , it was observed by the FSC and other submissions to the inquiry that the drafting of proposed Subsection 820-EAA was much more extensive in scope than required to capture these types of transaction. There was a concern that the rules as drafted were l

FAQs

What is the purpose of the FSC submission to Treasury?

The FSC submission provides additional comment on proposed exposure draft amendments and the explanatory memorandum for the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share–Integrity and Transparency) Bill 2023 currently before the Senate.

What concerns did the FSC raise about the original debt deduction creation rules?

The FSC previously identified that the drafting was more extensive than required to capture debt creation schemes lacking genuine commercial justification, creating a risk of unintended consequences, including denial of deductions for common and simple commercial transactions.

How do the amendments improve targeting under the interest limitation rules?

The amendments ensure not all debt financing transactions by related parties fall within scope, introduce specific exemptions including an exception for related party lending, and include a one-year grace period for arrangements entered into before 22 June 2023.

Oct 3, 2026

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