🇦🇺Australia

Thin Capitalisation Interest Denials

1 verified sources

Definition

Rules effective from 1 July 2023 materially lower deductibility for LBOs and geared infrastructure, requiring retesting of debt levels.

Key Findings

  • Financial Impact: Interest denied >30% tax EBITDA (e.g., 5-10% of debt costs on AUD72M avg deals)
  • Frequency: Per income year post-1 July 2023
  • Root Cause: Shift from asset to earnings-based tests

Why This Matters

The Pitch: PE firms in Australia 🇦🇺 lose millions in denied deductions on AUD 10B deals. Automated compliance modelling avoids thin cap penalties.

Affected Stakeholders

CFOs, Tax Directors

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Fundraising Cycle Disruption

AUD 5.7B fundraising (lowest decade level); AUM stagnant since 2022

Waterfall Calculation Errors

20-40 hours/month per fund admin at AUD 150/hour = AUD 3,000-6,000/month

Disputed Carried Interest

AUD 50,000+ legal/dispute costs per incident; 1-2% of fund profits clawed back

Fund Reporting Non-Compliance

AUD 11,100-$1.1M fines per breach (ASIC civil penalties); AUD 20k+ audit remediation

Fehlklassifizierung von Carried Interest führt zu Steuernachzahlungen und Strafen

Quantified: AUD 100k–300k per mid‑size fund over its life in additional income tax from denied CGT discount on misclassified carry (assuming AUD 5–10m of carry taxed at up to ~23.5 percentage‑points higher marginal rate), plus 25–50% administrative penalties on the shortfall and interest, yielding total exposures of AUD 150k–500k per fund in an ATO review.

Fehlerhafte Management-Fee-Berechnung und ‑Abrechnung

Quantified: For a representative AUD 200m fund at a 2% headline management fee (AUD 4m p.a.), a conservative 1–3% under‑billing or non‑recoverable adjustments from manual errors and LP disputes translates to AUD 40k–120k of lost revenue over a 5‑year fund life; larger multi‑fund managers can see cumulative leakage in the AUD 250k+ range across vintages.

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