The Australian Taxation Office (ATO) issued, on 29 November 2007, a draft of the long-awaited Taxation Determination TD 2007/D20 dealing with the interaction between thin capitalization and transfer pricing provisions. The Draft Determination is issued for public comment and represents the ATO's preliminary view on the subject. Briefly, the Draft Determination states that the transfer pricing rules (including those contained in the applicable tax treaty) may apply to disallow interest deductions, notwithstanding that no interest deductions are denied by the thin capitalization rules. For example, where the relevant interest rate is considered to be excessive, a deduction for the excessive...