Article: The choice of fixed accounting ratios as safe harbours in thin capitalisation rules - some guidance from commercial debt contracts.

Byline: Shee Boon Law

Jul 24, 2006 (Australian Tax Forum - ABIX via COMTEX) -- Current safe harbour provisions specified in Australia, New Zealand and the US utilise simple accounting ratios determined by policy makers. However, this practice can be compared with the accounting ratios used by lenders to determine a borrower's liquidity status. In 2006 the current safe harbour provisions are fixed at a higher level than commercial debt restrictions, and the latter ...

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