• Debt and equity tests

    The debt and equity tests help you work out the difference between a debt interest and an equity interest for tax purposes.

    The debt and equity tests explain:

    • when a scheme gives rise to a debt interest or an equity interest
    • how to identify debt for
      • thin capitalisation purposes
      • the consolidation measure
       

    The tests determine if a return on an interest in an entity is:

    • frankable and non-deductible (like a dividend)
    • deductible to the entity and not frankable (like interest payments).

    Next steps:

    Last modified: 15 Feb 2016QC 17055