Thin Capitalisation Analyser
Test whether your Australian business or investment entity exceeds thin capitalisation limits under the revised 2024 rules. Applies the Fixed Ratio Test (30% EBITDA), Arm's Length Debt Test, and Group Ratio Test.
Entity Details
Thin Cap Rules — 2024 Summary
Fixed Ratio Test (FRT) — Default from 2024-25
Net interest expense deductions are capped at 30% of adjusted tax EBITDA. Interest denied under FRT can be carried forward up to 15 years and deducted if later years have headroom. Replaces the old Safe Harbour 60%/1.5x equity test.
Arm's Length Debt Test (ALDT)
Allows deductions up to the amount an independent lender would lend on arm's length terms. Must be supported by detailed documentation demonstrating commercial lending principles were applied.
Group Ratio Test (GRT)
Allows Australian entities to use the global group's actual net interest/EBITDA ratio (if higher than 30%). Useful for highly-leveraged multinational groups where global gearing exceeds 30%.
Threshold — Who Must Comply?
Thin cap rules apply when total debt exceeds $2M and either: (a) Australian assets > $250K with foreign investments, or (b) entity is foreign-owned with AU operations. Small business entities (turnover < $50M) are generally exempt.