Thin Capitalisation Reforms Under Review: Key Dates and What Businesses Should Do
Last reviewed:
Primary tax-year context: Current Australian tax settings
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On 30 January 2026, the Government announced an independent review of key parts of Australia’s thin capitalisation reforms by the Board of Taxation.
The review focuses on how the post-1 July 2024 rules are operating in practice and whether technical settings are creating unintended outcomes.
Areas under review
Treasury’s announcement and the Board’s consultation material identify two high-priority areas:
- debt deduction creation rules
- interaction of thin capitalisation with transfer pricing related-party debt rules
These are technical areas, but they directly affect financing structures for inbound and outbound groups with cross-border related-party debt.
Consultation timeline
The Board’s consultation paper opened in early February 2026, with submissions requested by 2 March 2026.
For affected businesses, this is the most important immediate date because it is the window to put practical evidence in front of reviewers before recommendations are finalised.
Why this matters now
Since the 2024 reforms took effect, many groups have had their first full-year cycle of interpreting and applying the new limitations. Review processes at this stage often shape:
- clarifying amendments
- compliance guidance priorities
- where integrity rules may be narrowed or tightened
Practical steps for impacted taxpayers
If your group has material related-party funding, focus on:
- documenting transactions where debt deduction creation outcomes appear disproportionate
- identifying cases where transfer pricing and thin cap rules overlap in a way that creates double constraint
- preparing concise examples with numbers, not just principles, for any submission process
What to watch next
- publication of the Board’s final recommendations
- Treasury/Government response
- any amending bill or explanatory guidance changes for 2026-27 and later years