The steps a non-ADI general outward investor takes to calculate if they have met the thin capitalisation rules are:
- Step 1: Calculate the adjusted average debt
- Step 2: Calculate the safe harbour debt amount
- Step 2A: Calculate the average associate entity excess amount for the safe harbour debt amount (if they have more than one associate entity)
- Step 3: Calculate the worldwide gearing debt amount
- Step 4: Calculate the arm's length debt amount
- Step 5: Calculate debt deductions disallowed.
Summary flowchart
This flowchart summarises the steps a non-ADI general outward investor follows to work out whether any of its debt deductions are disallowed and, if so, the amount of the disallowed deductions. Use this flowchart to help you work through the steps.
Flowchart 2: Non-ADI general outward investor's steps to work out if any of the debt deductions are disallowed