Home Australian Capital Territory Thin Capitalisation legislation passage ‘will shrink housing supply’

Thin Capitalisation legislation passage ‘will shrink housing supply’

  • April 03, 2024
  • by Property Australia
The move has been called a “poorly targeted tax-grab”

Last week, the Senate passed the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Bill 2023, more commonly known as the Thin Capitalisation legislation. 

The legislation seeks to tighten thin capitalisation rules to prevent excessive debt deductions, minimising tax avoidance by companies in Australia.

Property Council Chief Executive Mike Zorbas said notwithstanding the prior, welcome government amendments, the passage of the legislation means significant institutional housing projects simply won’t go ahead.

“Australia has long relied on overseas investment to build the best parts of our cities,” Mr Zorbas said.

“This legislation will deter international investment in key city building projects and work against the government’s housing supply targets.

“We continue to support the integrity aims of the policy as announced. The legislation that passed the Senate today has a very different practical effect.

“The low point is that an Australian business, investing in Australia with only Australian assets and debt, can now be caught in profit shifting prevention laws where there is no offshore jurisdiction to shift profit to.

“What remains is a poorly targeted tax-grab that blunts overseas and domestic investment in city building assets, and especially housing, across the country.

“We will continue to demonstrate the negative impacts of the legislation in order to fix its flaws and champion investment in our cities,” he said.