• Entities that are both outward and inward investing entities

    If an entity is both an outward investing entity and an inward investing entity, the rules for outward investing entities apply. For example, if an Australian resident entity is foreign controlled and also carries on business through an overseas permanent establishment, the rules for outward investing entities apply subject to two qualifications:

    1. The entity is not able to apply the assets threshold test in section 820-37 of the ITAA 1997.
    2. The entity may choose to apply a worldwide gearing debt test, provided that certain requirements are met including a requirement that the entity’s Australian assets represent no more than 50% of the entity’s statement worldwide assets.

    The following tables summarise the rules explained in this section. They also tell you which section explains how to apply the thin capitalisation rules to the type of entity you are dealing with.

    Table 1: How to categorise the entity and where to find the rules for different entity types

     

    General entity

    Financial entity

    ADI entity

    Outward investor

    Non-ADI general outward investor

    Non-ADI financial outward investor

    ADI outward investing entity

    Inward investment vehicle

    Non-ADI general inward investment vehicle

    Non-ADI financial inward investment vehicle

    Not applicable

    Inward investor

    Non-ADI general inward investor

    Non-ADI financial inward investor

    ADI inward investing entity

    Outward investor and inward investment vehicle

    Non-ADI general outward investor

    Non-ADI financial outward investor

    ADI outward investing entity

    Table 2: How to categorise a financial entity that has elected to apply the ADI rules and where to find the rule

    Type of entity

    Elected classification and rules

    Outward investor – financial

    Outward investing ADI. The rules in Subdivision 820-D of the ITAA 1997 apply

    Refer to ADI outward investing entity

    Inward investment vehicle – financial

    Outward investing ADI. The rules in Subdivision 820-D of the ITAA 1997 apply

    Refer to ADI outward investing entity

    Inward investor – financial

    Inward investing ADI. The rules in Subdivision 820-E of the ITAA 1997 apply

    Refer to ADI inward investing entity

    Outward investor – financial, and inward investment vehicle – financial

    Outward investing ADI. The rules in Subdivision 820-D of the ITAA 1997 apply

    Refer to ADI outward investing entity

    Last modified: 09 Mar 2016QC 48185