Australia's Thin Capitalization Rule Changes in Effect

On July 1 2014, changes to Australia's thin capitalization rules entered into effect. The changes include:

• A reduction in the safe harbor debt to equity ratio from 3:1 to 1.5:1 for general entities, and from 20:1 to 15:1 for non-bank financial entities
• A reduction in the worldwide gearing ratio test for outbound investment from 120% to 100%, and allowing the application of the test for inbound investment
• An increase from 80% to 100% for the worldwide capital ratio for authorized deposit-taki…