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The Australian Federal Budget, which was released on 25 October, announces Australia’s fiscal outcomes and spending initiatives, as well as significant proposed tax changes. The fiscal outcomes show that Australia’s economy remains robust. The tax changes and spending measures could significantly impact businesses investing into Australia. These include proposed amendments to the thin capitalisation regime, restrictions on the deductibility of cross-border payments for intangibles, increased transparency obligations for multinational groups, and increased budget for the Australian Taxation Office (ATO) to undertake compliance activities directed toward multinational groups.

Taxpayers should monitor the progress of the announced taxation measures and consider how these measures might impact existing Australian operations or prospective investments. The multinational tax measures generally would apply to income tax years beginning on or after 1 July 2023, or to payments made on or after 1 July 2023. Before the effective date of these measures, draft legislation and ongoing consultation are expected.