Treasury has released a discussion paper seeking views on the 2012-13 Budget announcement to clarify the definition of limited recourse debt. As part of the 2012-13 Budget, the Government announced it would clarify that limited recourse debt includes arrangements where the creditor’s right to recover the debt is limited (contractually or otherwise) to the financed asset or security provided. The measure aims to ensure that tax deductions are not available for capital expenditure on assets that have been financed by limited recourse debt, to the extent that the taxpayer is not effectively at risk for the expenditure and does not make an economic loss. The changes are proposed to apply from 7.30pm (AEST) on 8 May 2012.
The paper is available on the Treasury website.
COMMENTS are due by 10 August 2012.
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