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Australia’s new thin capitalisation rules significantly impact businesses with foreign ownership or offshore operations. If your business has debt deductions (such as interest deductions and borrowing costs) of more than A$2m, tax deductions could be denied under the primary ‘earnings tests’ (particularly if your EBITDA is low or negative due to early-stage losses, especially common in sectors like infrastructure and technology). To manage the above risk, the legislation offers an alternative test: the Third Party Debt Test (TPDT).

For renewable energy companies, understanding the implications of the new thin capitalisation rules is crucial. These rules will apply for income years starting on or after July 1, 2023.

The Australian Federal Government is ambitiously targeting 82 per cent renewable energy by 2030, currently at 30-35 per cent. Support mechanisms span grants, loans, and equity investment, nurturing diverse sectors from critical minerals to clean energy technologies.