An entity is a general class investor for an income year if, and only if:
- for a period that is all or part of the income year, the entity is not any of the following
- an outward investing financial entity (non-ADI)
- an inward investing financial entity (non-ADI)
- an outward investing entity (ADI)
- an inward investing entity (ADI), and
- assuming that the entity were a financial entity for all of the income year, it would be, for the income year, any of the following
- an outward investing financial entity (non-ADI)
- an inward investing financial entity (non-ADI).
Effective for income years beginning on or after 1 July 2023, the following terms are repealed:
- outward investing entity (non-ADI)
- outward investor (general)
- inward investor (general)
- inward investing entity (non-ADI)
- inward investment vehicle (general)
- inward investor (general).
Entities that previously fell into one of the 'general' classes of entities – outward investor (general), inward investment vehicle (general) or inward investor (general) – will fall under the new 'general class investor' definition.
Broadly, the following entities, provided they are not financial entities or ADIs, will be general class investors:
- an Australian entity that controls a foreign entity or carries on business at or through an overseas permanent establishment
- an Australian entity that is an associate entity of the entity above
- an Australian entity that is controlled by a foreign entity or entities
- a foreign entity.
For general class investors, the amount of debt deductions disallowed (if any) for an income year is determined through the application of one of the following tests:
- the fixed ratio test
- the group ratio test
- the third party debt test.
Entities that are not general class investors are subject to the previous thin capitalisation tests, with the exception of the arm’s length debt test which is repealed for all entities for income years commencing on or after 1 July 2023.
The previous law continues to apply for entities that are Australian plantation forestry entities for a period that is all or part of the income year.