Interest-free loans: ATO releases draft guidance – 13 August 2020 has been saved
Interest-free loans: ATO releases draft guidance – 13 August 2020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:
- 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
- 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.