• Steps 2 and 3: Calculate the safe harbour debt amount

    The safe harbour debt amount for a financial entity is the lesser of the following two amounts:

    • the total debt amount – step 2
    • the adjusted on-lent amount – step 3.

    Both of these amounts must be calculated. The adjusted on-lent amount contains a concession in respect of the entity's on-lending business. It applies a 1.5:1 ratio to that part of the entity's business that does not constitute on-lending and then increases this amount by the value of the entity's on-lending business. However, the safe harbour debt amount is capped at 15:1 by the total debt amount, which applies a ratio of 15:1 to the entity's total business. The total debt amount contains a further concession for certain assets called zero-capital amounts. These amounts can be wholly funded by debt capital.

    Both the total debt amount and the adjusted on-lent amount are based on the value of Australian investments. 'Australian investments' in this context means assets that are either of the following:

    • attributable to the entity's Australian permanent establishments
    • held for the purposes of producing the entity's assessable income.

    These are referred to as Australian assets.

    Example 13: Australian assets

    A rental property located in Australia would be held for the purposes of producing assessable income. Australian shares that are taxable Australian property (see section 855-10 of the ITAA 1997) would be held for the purposes of producing assessable income. However, Australian shares that are not taxable Australian property would not be held for the purposes of producing assessable income because these shares would not give rise to a capital gain or loss on disposal. In addition, any dividend income, although subject to withholding tax, is excluded from assessable income and therefore the shares cannot be held for the purposes of producing assessable income – see section 128D of the ITAA 1936.

    End of example

    Table 44: Non-ADI financial inward investor's step 2, Table 46: Non-ADI financial inward investor's step 3, Worksheet 36: Non-ADI financial inward investor's step 2 and Worksheet 38: Non-ADI financial inward investor's step 3 explain how to work out the total debt amount and adjusted on-lent amount.

    If the entity has any associate entities that are subject to the thin capitalisation rules, you also need to work through:

    • Table 45: Non-ADI financial inward investor's step 2A and Worksheet 37: Non-ADI financial inward investor's step 2A for the total debt amount
    • Table 47: Non-ADI financial inward investor's step 3A and Worksheet 39: Non-ADI financial inward investor's step 3A for the adjusted on-lent amount.

    See also:

    Table 44: Non-ADI financial inward investor's step 2

    Steps

    Comments

    Step 2.1: Calculate the average value, for the income year, of all the entity's Australian assets

    Insert this amount at E on Worksheet 36: Non-ADI financial inward investor's step 2

    The first step is to work out the average value of the entity's Australian assets. This includes all the assets that are attributable to the entity's Australian permanent establishments and other assets that are held for the purposes of producing the entity's assessable income

    Step 2.1A: Calculate the average value, for that year, of the entity's excluded equity interest

    Insert this amount at KK on Worksheet 36: Non-ADI financial inward investor's step 2

    Certain short-term equity interests reduce the safe harbour debt amount for integrity reasons.

    See excluded equity interests

    Step 2.2: Transfer the amount from B on Worksheet 35: Non-ADI financial inward investor's step 1 to B on Worksheet 36: Non-ADI financial inward investor's step 2

    This is the average associate entity debt attributable to the entity's Australian permanent establishments. It is the same amount calculated at B on Worksheet 35: Non-ADI financial inward investor's step 1 (step 1.2) and can be transferred directly from there.

    Step 2.3: Calculate the average value, for that year, of all the entity's associate entity equity that has arisen because of the Australian assets

    Insert this amount at F on Worksheet 36: Non-ADI financial inward investor's step 2

    This is the average associate entity equity attributable to the entity's Australian permanent establishments

    Step 2.4: Calculate the average value, for that year, of all the entity's non-debt liabilities that have arisen because of the Australian assets

    Insert this amount at G on Worksheet 36: Non-ADI financial inward investor's step 2

     

    Step 2.5: Calculate the average value of the entity's zero-capital amount that has arisen because of the Australian assets

    Insert this amount at ZC on Worksheet 36: Non-ADI financial inward investor's step 2

     

    Step 2.6: Calculate the entity's net Australian assets funded by debt and equity. This is the result of EKKBFGZC

    Insert the result at H on Worksheet 36: Non-ADI financial inward investor's step 2

    This step reduces total assets (E) by the amounts worked out in steps 2.1A to 2.5. The amount at H represents the net Australian assets funded by debt and equity.

    Step 2.7: Multiply the amount at H by 15/16

    Insert the result at J on Worksheet 36: Non-ADI financial inward investor's step 2

    Multiplying the amount at H (net assets) by 15/16 reflects the debt to equity ratio of 15:1

    Step 2.8: Add back the average value of the entity's zero-capital amount from step 2.5

    Insert this amount at ZC on Worksheet 36: Non-ADI financial inward investor's step 2

    The zero-capital amount was taken out at step 2.5 and is now added back so that the total debt amount is increased by the average value of the zero-capital amount

    Step 2.9: If the entity does not have any associate entities that are non-ADIs and subject to the thin capitalisation rules, insert 0 (zero) at K on Worksheet 36: Non-ADI financial inward investor's step 2. Otherwise, calculate the entity's average associate entity excess amount – see Worksheet 37: Non-ADI financial inward investor's step 2A

    Transfer the amount at K on Worksheet 37: Non-ADI financial inward investor's step 2A to K on Worksheet 36: Non-ADI financial inward investor's step 2

    The average associate entity excess amount is, broadly, the excess borrowing capacity of any associate entity that is a non-ADI entity and subject to the thin capitalisation rules. It also recognises any premium paid for the investment in an associate entity. This amount is worked out in step 2A – K on Worksheet 37: Non-ADI financial inward investor's step 2A

    Note: If the entity does not have any associate entities that are non-ADIs and subject to the thin capitalisation rules, this amount is zero

    Step 2.10: Calculate the entity's total debt amount by adding the amount at J, the amount at ZC and the amount at K

     

    Worksheet 36: Non-ADI financial inward investor's step 2

    Steps

    $

    Step 2.1: Average Australian assets

    Step 2.1A: Average excluded equity interests

    (E) _______________

    (KK) ______________

    Step 2.2: Average associate entity debt – from B on Worksheet 35: Non-ADI financial inward investor's step 1

    (B) ______________

    Step 2.3: Average associate entity equity

    (F) _______________

    Step 2.4: Average non-debt liabilities

    (G) ______________

    Step 2.5: Average zero-capital amount

    (ZC) _____________

    Step 2.6: EKKBFGZC

    (H) ______________

    If H is negative, it is taken to be zero

    Step 2.7: H X 15/16

    (J) ______________

    Step 2.8: Average zero-capital amount – from step 2.5

    (ZC) _____________

    Step 2.9: Average associate entity excess amount – from K on Worksheet 37: Non-ADI financial inward investor's step 2A

    (K) ______________

    Step 2.10: Total debt amount (J + ZC + K)

    = _______________

    This is the entity's total debt amount. You must now work out the entity's adjusted on-lent amount (step 3). The lesser of the total debt amount and the adjusted on-lent amount is the entity's safe harbour debt amount.

    See also:

    • Worked example of calculations for a non-ADI financial inward investor.

    Calculating K: the average associate entity excess amount for the total debt amount

    Table 45: Non-ADI financial inward investor's step 2A and Worksheet 37: Non-ADI financial inward investor's step 2A set out how to calculate the amount at K on Worksheet 36: Non-ADI financial inward investor's step 2 – the average associate entity excess amount.

    If the entity does not have any associate entities that have been attributed to an Australian permanent establishment and that are non-ADI entities subject to the thin capitalisation rules, do not complete this step. Show zero at K on Worksheet 36: Non-ADI financial inward investor's step 2.

    The associate entity excess amount is the sum of two amounts:

    The associate entity excess amount is calculated on each of the investing entity's measurement days for each associate entity. For example, if the investing entity uses the opening and closing balances measurement method, it must calculate its associate entity excess amount on the opening day and closing day of the income year. The positive amounts are added together and divided by the number of measurement days to calculate the average associate entity excess amount. Negative amounts are disregarded because a negative associate entity excess amount for one associate entity does not reduce a positive associate entity excess amount for another associate entity.

    See also:

    Explanation: Calculate the average associate entity excess amount – for the total debt amount

    If the entity has more than one associate entity, repeat steps 2A.1 to 2A.12 for each associate entity on each of the investing entity's measurement days. The associate entity must be a non-ADI subject to the thin capitalisation rules.

    Table 45: Non-ADI financial inward investor's step 2A

    Steps

    Comments

    Step 2A.1: Calculate, on a particular measurement day, the value of the entity's associate entity equity attributable to the associate entity, excluding the value of any debt interests issued to the investing entity by the associate entity

    Insert this amount at L on Worksheet 37: Non-ADI financial inward investor's step 2A

    This is the value, on a measurement day, of the equity the entity has invested in its associate entity. This excludes any debt interests that may be included in associate entity equity

    Step 2A.2: Calculate, on the measurement day, the value of the associate entity's equity capital that is attributable to the entity's Australian assets

    Insert this amount at M on Worksheet 37: Non-ADI financial inward investor's step 2A

    This is the value, on a measurement day, of the associate entity's equity capital attributable to the investing entity's Australian assets. This is measured by the associate entity in accordance with the accounting standards

    Step 2A.3: Calculate the entity's premium excess amount by deducting the amount at M from the amount at L and multiplying the result by 15/16. Insert the result at N on Worksheet 37: Non-ADI financial inward investor's step 2A

     

    Step 2A.4: Calculate the associate entity's safe harbour debt amount on the measurement day as if the period consisted of one day only. If the associate entity is a financial inward investor or a financial inward investment vehicle, it is treated as a financial entity inward for these purposes

    Insert this amount at P on Worksheet 37: Non-ADI financial inward investor's step 2A

    The safe harbour debt amount must be calculated for the associate entity on a measurement day. If the associate entity is an:

    • inward investor, complete the calculations in step 2 of 'Non-ADI financial inward investor' for the associate entity
    • inward investment vehicle, complete the safe harbour debt calculation in step 2 of 'Non-ADI financial inward investment vehicle' for the associate entity
     

    Step 2A.5: Calculate, on the measurement day, the value of the associate entity's adjusted average debt as if the period consisted of one day only. Insert this amount at Q on Worksheet 37: Non-ADI financial inward investor's step 2A

    You must also work out the associate entity's adjusted average debt on a measurement day

    Step 2A.6: Deduct the amount at Q from the amount at P

    Insert the result at R on Worksheet 37: Non-ADI financial inward investor's step 2A

    Taking the adjusted average debt (Q) away from the safe harbour debt amount (P) gives the associate entity's excess borrowing capacity on a measurement day. If the associate entity has exceeded its safe harbour debt amount, this amount will be negative and is treated as zero.

    Step 2A.7: Calculate, on the measurement day, the sum of the value of the:

    • associate entity's equity capital attributable to the investing entity
    • debt interests issued to the investing entity by the associate entity that 
      • are on issue
      • no part of which forms part of the associate entity's cost-free debt capital
      • do not give rise to costs covered by paragraph 820-40(1)(a) of the ITAA 1997
       
    • debt interests issued to the investing entity by the associate entity that 
      • are on issue
      • give rise to costs covered by paragraph 820-40(1)(a) of the ITAA 1997 but those costs are not deductible from the associate entity's assessable income in any income year
       

    Insert the result at S on Worksheet 37: Non-ADI financial inward investor's step 2A

    This works out the value of the associate entity's equity capital, including certain debt interests, attributable to the investing entity on a measurement day

    Step 2A.8: Calculate, on the measurement day, the sum of the value of all the:

    • associate entity's equity capital
    • debt interests issued by the associate entity that 
      • are on issue
      • no part of which forms part of the associate entity's cost-free debt capital
      • do not give rise to costs covered by paragraph 820-40(1)(a) of the ITAA 1997
       
    • debt interests issued by the associate entity that 
      • are on issue
      • give rise to costs covered by paragraph 820-40(1)(a) of the ITAA 1997but those costs are not deductible from the associate entity's assessable income in any income year
       

    Insert this amount at T on Worksheet 37: Non-ADI financial inward investor's step 2A

    This works out the value of the associate entity's total equity capital, including certain debt interests, on a measurement day

    Step 2A.9: Divide the amount at S by the amount at T.

    Insert the result at U on Worksheet 37: Non-ADI financial inward investor's step 2A

    This works out the proportion of the associate entity's equity capital attributable to the investing entity on a measurement day

    Step 2A.10: Calculate the entity's attributable safe harbour excess amount by multiplying the amount at R (the associate entity's excess capacity) by the amount at U (the proportion of equity capital attributable to the investing entity)

    Insert the result at V on Worksheet 37: Non-ADI financial inward investor's step 2A

    This applies the proportion worked out in step 2A.9 to the associate entity's excess borrowing capacity to work out the amount of that excess capacity that can be attributed to the investing entity.

    Step 2A.11: Calculate the entity's associate entity excess amount by adding the amounts at N (premium excess amount) and V (attributable safe harbour excess amount)

    Insert the result at W on Worksheet 37: Non-ADI financial inward investor's step 2A

    This is the associate entity excess amount for a single associate entity on a measurement day of the investing entity

    Step 2A.12: If the entity has only one associate entity, transfer any positive amount at W to X on Worksheet 37: Non-ADI financial inward investor's step 2A. Otherwise, repeat steps 2A.1 to 2A.11 for each associate entity. Then add all positive results at W and insert at X on Worksheet 37: Non-ADI financial inward investor's step 2A

    The associate entity excess amount must be worked out for each associate entity on a measurement day. Add all the positive associate entity excess amounts together to get the total associate entity excess amount on any particular measurement day. If the entity has only one associate entity, the amount at W will be the same as the amount at X, provided X is positive. If X is negative, it is disregarded

    Step 2A.13: Calculate X (the total associate entity excess amount – steps 2A.1 to 2A.12) on each other measurement day

    The associate entity excess amount for all associate entities is calculated on each of the investing entity's measurement days

    Step 2A.14: Calculate the entity's average associate entity excess amount by adding the results at X for each measurement day and divide by the number of measurement days

    Insert the result at K on Worksheet 36: Non-ADI financial inward investor's step 2

    The results are added together and divided by the number of measurement days to get the average associate entity excess amount

    Worksheet 37: Non-ADI financial inward investor's step 2A

    Steps

    $

    Step 2A.1: Investing entity's associate entity equity on a measurement day

    (L) ______________

    Step 2A.2: Associate entity equity capital on a measurement day attributable to investing entity

    (M) _____________

    If M is negative it is taken to be nil

    Step 2A.3: Premium excess amount (LM) x 15/16

    (N) ____________

    N may be a negative amount

    Step 2A.4: Associate entity's safe harbour debt amount on a measurement day

    (P) ______________

    Step 2A.5: Associate entity's adjusted debt amount on a measurement day

    (Q) _____________

    Step 2A.6: PQ

    (R) ______________

    If R is negative, it is taken to be nil

    Step 2A.7: Associate entity's equity capital attributable to investing entity on a measurement day

    (S) ______________

    Step 2A.8: Associate entity's total equity capital on a measurement day

    (T) ______________

    Step 2A.9: S   T

    (U) ______________

    Step 2A.10: Attributable safe harbour excess amount (R x U)

    (V) ____________

    Step 2A.11: Associate entity excess amount on a measurement day for one associate entity (N + V)

    (W) _____________

    Step 2A.12: Associate entity excess amount of a measurement day for all associate entities – sum of positive results at W

    Now calculate the associate entity excess amount for all associate entities on the investing entity's other measurement days – step 2A.13

    (X) _____________

    Step 2A.14: The average value of the associate entity excess amount – sum of results at X divided by the number of measurement days

    = (K) ____________

    Transfer this amount to K on Worksheet 36: Non-ADI financial inward investor's step 2

    Table 46: Non-ADI financial inward investor's step 3

    Steps

    Comments

    Step 3.1: Transfer the amount from E on Worksheet 36: Non-ADI financial inward investor's step 2 to E on Worksheet 38: Non-ADI financial inward investor's step 3

    This is the average value of the entity's Australian assets. This amount has already been worked out at E on Worksheet 36: Non-ADI financial inward investor's step 2 (step 2.1) and can be transferred directly from there

    Step 3.1A: Transfer the amount from KK on Worksheet 36: Non-ADI financial inward investor's step 2 to KK on Worksheet 38: Non-ADI financial inward investor's step 3

    This is the average value of the entity's excluded equity interests. This amount has already been worked out at KK on Worksheet 36: Non-ADI financial inward investor's step 2 (step 2.1A) and can be transferred directly from there

    Step 3.2: Transfer the amount from F on Worksheet 36: Non-ADI financial inward investor's step 2 to F on Worksheet 38: Non-ADI financial inward investor's step 3

    This is the average value of associate entity equity attributable to the Australian permanent establishment This amount has already been worked out at F on Worksheet 36: Non-ADI financial inward investor's step 2 (step 2.3) and can be transferred directly from there

    Step 3.3: Transfer the amount from G on Worksheet 36: Non-ADI financial inward investor's step 2 to G on Worksheet 38: Non-ADI financial inward investor's step 3

    This is the average value of non-debt liabilities that have arisen because of the Australian assets. This amount has already been worked out at G on Worksheet 36: Non-ADI financial inward investor's step 2 (step 2.4) and can be transferred directly from there

    Step 3.4: Calculate the average value of the entity's on-lent amount, to the extent it is an Australian asset

    Insert the result at OA on Worksheet 38: Non-ADI financial inward investor's step 3

    This reduces Australian assets by the value of the entity's on-lending business, to the extent the on-lent amounts are Australian assets of the inward investor

    Step 3.5: Calculate the entity's net Australian non-lending assets funded by debt and equity. This is the result of EKKFGOA

    Insert the result at Y on Worksheet 38: Non-ADI financial inward investor's step 3

    This reduces total assets (E) by the amounts worked out in steps 3.2 to 3.5. The amount at Y represents the net Australian, non-lending assets funded by debt and equity

    Step 3.6: Multiply the amount at Y by 3/5. Insert the result at Z on Worksheet 38: Non-ADI financial inward investor's step 3

    Multiplying the amount at Y by 3/5 reflects the debt to equity ratio of 1.5:1 applied to the entity's non-lending business

    Step 3.7: Add back the average value of the entity's on-lent amount from step 3.4

    Insert the amount at OA on Worksheet 38: Non-ADI financial inward investor's step 3

    This is the same amount calculated in step 3.4. This adds back the on-lent amount

    Step 3.8: Transfer the amount from B on Worksheet 35: Non-ADI financial inward investor's step 1 to B on Worksheet 38: Non-ADI financial inward investor's step 3

    This is the average value of associate entity debt. This amount has already been worked out at B on Worksheet 35: Non-ADI financial inward investor's step 1 (step 1.2) and can be transferred directly from there – this is also the same amount at B on Worksheet 36: Non-ADI financial inward investor's step 2

    Step 3.9: If the entity does not have any associate entities that are non-ADI entities and subject to the thin capitalisation rules, insert 0 (zero) at AA on Worksheet 38: Non-ADI financial inward investor's step 3

    Otherwise, calculate the entity's average associate entity excess amount – see Worksheet 39: Non-ADI financial inward investor's step 3A. Transfer the amount from AA on Worksheet 39: Non-ADI financial inward investor's step 3A to AA on Worksheet 38: Non-ADI financial inward investor's step 3

    The associate entity excess amount is, broadly, the excess borrowing capacity of any associate entities that are non-ADI entities and subject to the thin capitalisation rules. It also recognises any premium paid for the investment in an associate entity. This amount is worked out in step 3A (AA on Worksheet 39: Non-ADI financial inward investor's step 3A)

    Note: If the entity does not have any associate entities that are non-ADI entities and subject to the thin capitalisation rules, the average associate entity excess amount is zero

    Step 3.10: Calculate the entity's adjusted on-lent amount. This is the result of Z + OAB + AA

     

    Worksheet 38: Non-ADI financial inward investor's step 3

    Steps

    $

    Step 3.1: Average assets – from E on Worksheet 36: Non-ADI financial inward investor's step 2

    (E) ______________

    Step 3.1A: Average excluded equity interests – from KK on Worksheet 36: Non-ADI financial inward investor's step 2

    (KK) ______________

    Step 3.2: Average associate entity equity – from F on Worksheet 36: Non-ADI financial inward investor's step 2

    (F) ______________

    Step 3.3: Average non-debt liabilities – from G on Worksheet 36: Non-ADI financial inward investor's step 2

    (G) ______________

    Step 3.4: Average on-lent amount

    (OA) _____________

    Step 3.5:EKKFGOA

    (Y) ______________

    If Y is negative, it is taken to be zero

    Step 3.6:Y x 3/5

    (Z) ______________

    Step 3.7: Average on-lent amount – from step 3.4

    (OA) ______________

    Step 3.8: Average associate entity debt – from B on Worksheet 35: Non-ADI financial inward investor's step 1

    (B) _______________

    Step 3.9: Average associate entity excess amount

    (AA) _____________

    From AA on Worksheet 39: Non-ADI financial inward investor's step 3A

    3.10: Adjusted on-lent amount (Z + OAB + AA)

    = _______________

    This is the entity's adjusted on-lent amount. The lesser of the total debt amount (step 2) and the adjusted on-lent amount is the entity's safe harbour debt amount.

    If the entity's adjusted average debt is equal to or less than the safe harbour debt amount, it is not disallowed any debt deductions under the thin capitalisation rules. You do not have to complete any further calculations.

    However, if the entity's adjusted average debt is more than the safe harbour debt amount, you can choose to calculate an arm's length debt amount for the entity – step 4 or the worldwide gearing debt amount – step 5. If you do not want to calculate an arm's length debt amount or the worldwide gearing debt amount you can use your safe harbour debt amount as the maximum allowable debt and debt deductions will be disallowed on this basis – see step 6.

    See also:

    • Worked example of calculations for a non-ADI financial inward investor.

    Calculating AA: The average associate entity excess amount for the adjusted on-lent amount

    Table 47: Non-ADI financial inward investor's step 3A and Worksheet 39: Non-ADI financial inward investor's step 3A set out how to calculate the amount at AA on Worksheet 38: Non-ADI financial inward investor's step 3 – the average associate entity excess amount.

    If the entity does not have any associate entities that are non-ADI entities and subject to the thin capitalisation rules, do not complete this step. Show zero at AA on Worksheet 38: Non-ADI financial inward investor's step 3.

    Step 3.9 is the equivalent of step 2.9 in the total debt amount calculation. The only difference is in the premium excess amount calculation. The premium excess amount is worked out by applying the gearing ratio of 1.5:1 to the premium excess rather than the gearing ratio of 15:1. The attributable safe harbour excess amount will be exactly the same and can be transferred directly from Worksheet 37: Non-ADI financial inward investor's step 2A.

    See also:

    Explanation: Calculate the average associate entity excess amount for the adjusted on-lent amount

    If the entity has more than one associate entity, repeat steps 3A.1 to 3A.6 for each associate entity on each of the investing entity's measurement days. The associate entity must be a non-ADI and subject to the thin capitalisation rules.

    Table 47: Non-ADI financial inward investor's step 3A

    Steps

    Comments

    Step 3A.1: Transfer the amount at L on Worksheet 37: Non-ADI financial inward investor's step 2A to L on Worksheet 39: Non-ADI financial inward investor's step 3A

    This is the value, on a particular measurement day, of the associate entity equity attributable to the associate entity – excluding debt interests. This amount has already been worked out at L on Worksheet 37: Non-ADI financial inward investor's step 2A (step 2A.1) and can be transferred directly from there

    Step 3A.2: Transfer the amount at M on Worksheet 37: Non-ADI financial inward investor's step 2A to M on Worksheet 39: Non-ADI financial inward investor's step 3A

    This is the value, on a particular measurement day, of the associate entity's equity capital attributable to the investing entity. This amount has already been worked out at M on Worksheet 37: Non-ADI financial inward investor's step 2A (step 2A.2) and can be transferred directly from there

    Step 3A.3: Calculate the entity's premium excess amount by deducting the amount at M from the amount at L and multiplying the result by 3/5

    Insert the result at BB on Worksheet 39: Non-ADI financial inward investor's step 3A

     

    Step 3A.4: Transfer the amount at V on Worksheet 37: Non-ADI financial inward investor's step 2A to V on Worksheet 39: Non-ADI financial inward investor's step 3A

    This is the attributable safe harbour excess amount on a particular measurement day. This amount was already worked out at V on Worksheet 37: Non-ADI financial inward investor's step 2A (step 2A.10) and can be transferred directly from there.

    Step 3A.5: Calculate the entity's associate entity excess amount by adding the amounts at BB (premium excess amount) and V (attributable safe harbour excess amount)

    Insert the result at CC on Worksheet 39: Non-ADI financial inward investor's step 3A

    This is the associate entity excess amount for a single associate entity on a measurement day of the investing entity

    Step 3A.6: If the entity has only one associate entity, transfer any positive amount at CC to DD on Worksheet 39: Non-ADI financial inward investor's step 3A. Otherwise, repeat steps 3A.1 to 3A.5 for each associate entity. Then add all positive results at CC and insert at DD on Worksheet 39: Non-ADI financial inward investor's step 3A

    The associate entity excess amount must be worked out for each associate entity on a measurement day. Add all the positive associate entity excess amounts together to get the total associate entity excess amount on any particular measurement day. If the entity has only one associate entity, the amount at DD will be the same as the amount at CC, provided DD is positive. If DD is negative, it is disregarded

    Step 3A.7: Calculate DD (the total associate entity excess amount – steps 3A.1 to 3A.6) on each other measurement day

    The associate entity excess amount is calculated on each of the investing entity's measurement days

    Step 3A.8: Calculate the entity's average associate entity excess amount by adding the results at DD for each measurement day and divide by the number of measurement days

    Insert the result at AA on Worksheet 39: Non-ADI financial inward investor's step 3A

    The results are added together and divided by the number of measurement days to get the average associate entity excess amount

    Worksheet 39: Non-ADI financial inward investor's step 3A

    Steps

    $

    Step 3A.1: Investing entity's associate entity equity on a measurement day – from L on Worksheet 37: Non-ADI financial inward investor's step 2A

    (L) ______________

    Step 3A.2: Associate entity's equity capital attributable to the investing entity on a measurement day – from M on Worksheet 37: Non-ADI financial inward investor's step 2A

    (M) ______________

    If M is negative, it is taken to be nil

    Step 3A.3: Premium excess amount (LM) x3/5

    (BB) ____________

    BB may be a negative amount

    Step 3A.4: Attributable safe harbour excess amount – from V on Worksheet 37: Non-ADI financial inward investor's step 2A

    (V)_____________

    Step 3A.5: Associate entity excess amount on a measurement day for one associate entity (BB + V)

    (CC) ____________

    Step 3A.6: Associate entity excess amount on a measurement day for all associate entities – sum of positive results at DD

    Now calculate the associate entity excess amount for all associate entities on the investing entity's other measurement days – step 3A.7

    (DD) ____________

    Step 3A.8: The average value of the associate entity excess amount – sum of results at DD divided by the number of measurement days

    = (AA) ____________

    Transfer this amount to AA on Worksheet 38: Non-ADI financial inward investor's step 3

    Last modified: 09 Mar 2016QC 48253