The six steps a non-ADI financial inward investment vehicle takes to calculate if they have met the thin capitalisation rules are:
- Step 1: Calculate the adjusted average debt
- Step 2 and 3: Calculate the safe harbour debt amount
- Step 4: Calculate the arm's length debt amount
- Step 5: Calculate the worldwide gearing debt amount
- Step 6: Calculate debt deductions disallowed.
A financial entity that elects to use the thin capitalisation rules that apply to ADI entities will need to refer to ADI inward investing entity.
For more information, see Electing to use the ADI rules.
This flowchart summarises the steps a non-ADI financial inward investment vehicle 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 5: Non-ADI financial inward investment vehicle's steps to work out if any of the debt deductions are disallowed
Six steps non-ADI financial inward investment vehicles take to calculate if they have met the thin capitalisation rules.