Debt and Interest for Domestic and Tax Treaty Purposes

The Federal Court has just released a second judgment on the interpretation of an Australian tax treaty, this time on the Australia – US treaty.  The judgment addresses the difficult intersection between Australia’s debt-equity classification rules and the characterisation of income flows for the purposes of tax treaties.  The Court held that the taxpayer, a non-resident financial institution, was liable to Australian withholding tax on amounts paid to it.  For our full Tax Brief - click here