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On 16 March 2023, the Australian Treasury released for comment draft law and explanatory materials to implement the Federal Government’s proposed new interest limitation rules that will replace the existing thin capitalisation safe harbour, worldwide gearing and arm’s length debt tests. These new rules will apply for income years commencing on or after 1 July 2023.

With only a little over three months before the earliest start date, there is not much time for taxpayers to assess the impact that the new measures will have on their capital structure and any consequential impacts of refinancing, if required.