Exposure draft to improve the debt equity rules – 25 October 2016

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Exposure draft to improve the debt equity rules – 25 October 2016

Tax insights

On 10 October 2016, the Government released exposure draft (ED) legislation, explanatory memorandum and legislative instrument setting out proposed amendments to improve the debt-equity rules in Division 974 of the Income Tax Assessment Act 1997 (ITAA 1997) as recommended by the Board of Taxation in its March 2015 report.

The ED proposes a new rule (the new scheme aggregation rule) for determining when two or more schemes should be treated as a single scheme for debt-equity purposes. The scheme aggregation rule is intended to replace both existing related schemes provisions and the overarching integrity provision in section 974-80. 

Exposure draft to improve the debt equity rules
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