Interest-free loans: ATO releases draft guidance

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Interest-free loans: ATO releases draft guidance – 13 August 2020

On 12 August 2020, the ATO issued long-awaited transfer pricing guidance on interest-free loans between related parties, in “Draft Schedule 3 – Interest-free loans” (Draft Schedule) to the ATO’s financing PCG (PCG 2017/4). The Draft Schedule covers only outbound interest-free loans between related parties for transfer pricing purposes and focuses on two areas:

  1. Factors under which the PCG risk score for outbound interest-free loans with related parties, based on Schedule 1 of the PCG, might be modified; and
  2. Practical guidance as to when the ATO will dedicate resources to review arrangements involving interest-free loans.

The Draft Schedule also includes a number of examples showing how the framework is intended to operate.

This guidance is currently in draft, with comments to be submitted to the ATO by 14 October 2020.

Interest-free loans: ATO releases draft guidance – 13 August 2020
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