The following tables set out what rules will apply to a consolidated group or MEC group that includes an ADI or single company that treats an Australian branch of an establishment entity as part of itself.
|
Group composition |
Classification |
|---|---|
|
At least one member of the group would be an outward investing entity (ADI) – ignoring the application of the consolidation provisions; that is, classify the member as if it were a separate entity. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to paragraph 820-583(7)(a) of the ITAA 1997 for more information. |
|
At least one member of the group is an outward investing financial entity (non-ADI) and at least one other member is an ADI. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to paragraph 820-583(7)(b) of the ITAA 1997 for more information. |
|
The head company of a MEC group is not an outward investing entity (ADI) and the group includes:
|
Treated as if an outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to section 820-587 of the ITAA 1997 for more information. |
|
The head company has made a choice to apply the ADI rules under Subdivision 820-EA of the ITAA 1997 and the head company would otherwise be classified as an outward investor – financial entity. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to section 820-430(1) of the ITAA 1997 for more information. |
|
The head company has made a choice to apply the ADI rules under Subdivision 820-EA of the ITAA 1997 and the head company would otherwise be classified as an inward investment vehicle – financial. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to section 820-430(1) of the ITAA 1997 for more information. |
|
Group composition |
Classification |
|---|---|
|
The head company or single company is an outward investing entity (ADI) and elects to group with a branch of an establishment entity that is a foreign bank. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to paragraph 820-609(1)(b) of the ITAA 1997 for more information. |
|
The head company or single company would otherwise be an outward investing financial entity (non-ADI) and elects to group with a branch of an establishment entity that is a foreign bank. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to paragraph 820-609(1)(b) of the ITAA 1997 for more information |
|
The head company has chosen to treat an Australian branch of an establishment entity as part of itself under section 820-597 of the ITAA 1997 and, had that choice not been made, would be exempt from the thin capitalisation rules under section 820-585. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to: |
|
The head company has chosen to treat an Australian branch of an establishment entity as part of itself under section 820-597 of the ITAA 1997 and, had that choice not been made, would have been treated as an outward investing entity (ADI) under section 820-587. |
Outward investing entity (ADI) and the rules in Subdivision 820-D of the ITAA 1997 apply. Refer to:
|
|
The head company or single company would, had the choice to include an Australian branch of an establishment entity not been made, be classified as an inward investment vehicle – financial. |
Inward investing entity (ADI) and the rules in Subdivision 820-E of the ITAA 1997 apply. Refer to:
|
Effect of making a choice
The thin capitalisation rules will apply even if the thin capitalisation rules would otherwise not apply to the head company or single company had the choice to include the Australian branch not been made. That is, if the group would otherwise have been exempt from thin capitalisation because of section 820-585 of the ITAA 1997, it will be subject to thin capitalisation once the choice is made.