Advice under development: Thin capitalisation and the attribution of risk-weighted assets to Australian branches of foreign banks – ATO compliance approach
Issue: Thin capitalisation and the attribution of risk-weighted assets to Australian branches of foreign banks – ATO compliance approach
Category: International
Type of advice: Final Practical Compliance Guideline
Status: Under development
Expected completion: Mid to late 2026
Purpose: A final Guideline is being developed on a thin capitalisation issue which impacts foreign banks that conduct their banking business in Australia through a branch. Relevantly, the Guideline will outline the ATO’s compliance approach to determining the risk-weighted assets attributable to a branch for the purposes of the thin capitalisation rules for inbound banks in section 820-405 of the Income Tax Assessment Act 1997 . | This guidance builds upon feedback received on: | Discussion paper Thin capitalisation – attribution of risk weighted assets to Australian branches of foreign banks , which closed on 31 May 2024, and | Draft Practical Compliance Guideline PCG 2026/D1 Thin capitalisation and the attribution of risk-weighted assets to Australian branches of foreign banks – ATO compliance approach .
Comments: Draft Practical Compliance Guideline PCG 2026/D1 published on 25 March 2026. Comments period closed on 8 May 2026. Submissions are currently being considered.
Referenced documents: Discussion paper | PCG 2026/D1