Section D: Thin capitalisation

About thin capitalisation

Section D deals with information about how the thin capitalisation rules in Division 820 of the ITAA 1997 applied to you during 2023–24.

Amendments to Division 820 in the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (Amending Act) introducing a new thin capitalisation regime came into effect for income years starting on or after 1 July 2023.

Substantial updates to Section D reflect those changes.

The new disclosure requirements help us to assess tax risks associated with the new thin capitalisation rules, including questions to assess the impact of the new rules and how the new rules apply to different classes of entities.

The thin capitalisation rules which apply depend on whether your income year starts before or after 1 July 2023. We've therefore designed this year's form to minimise unnecessary duplication and allow for redundant questions to be removed from next year's form.

In particular, early balancers with an income year starting before 1 July 2023 and Australian plantation forestry entities are not affected by the Amending Act. Accordingly, we’ve designed the form so that the thin capitalisation disclosures for these entities are largely the same as previous years.

Question 30a Were the thin capitalisation rules applicable to you?

If the thin capitalisation provisions in Subdivision 820-AA, 820-B, 820-C, 820-D or 820-E of the ITAA 1997 applied to you, print X in the Yes box at question 30a – label A and go to question 31.

If the thin capitalisation provisions in Subdivision 820-AA, 820-B, 820-C, 820-D or 820-E didn't apply to you, print X in the No box at question 30a – label A and go to question 30b.

The thin capitalisation rules were not applicable to you if, for all parts of the income year, the exemptions in section 820-35, 820-37 or 820-39 applied to you.

You must print X in the Yes box at question 30a – label A and go to question 31, if:

• you are an entity that doesn't incur debt deductions for the income year
• sections 820-37 and 820-39 don't apply to you; and
• you and all of your relevant associate entities have total debt deductions exceeding $2 million for the income year.

For more information about the thin capitalisation rules, see Thin capitalisation.

Question 30b Did you rely on the $2 million threshold exemption?

You will not be required to apply the thin capitalisation provisions under section 820-35 of the ITAA 1997 if you and all of your associate entities (within the meaning of section 820-905) have total debt deductions of $2 million or less.

If section 820-35 applies to you, print X in the Yes box at question 30b – label A and go to question 40.

If section 820-35 didn't apply to you, and you answered No to question 30a. You must print X in the No box at question 30b and go to question 30c.

Question 30c Other exemptions

Did you rely on one of the following exemptions in determining the thin capitalisation rules did not disallow any of your debt deductions?

The thin capitalisation provisions don't apply to disallow any of your debt deductions if you meet the conditions in sections 820-37 or 820-39 of the ITAA 1997.

The '90% asset test' in section 820-37 applies if the following is true:

• you are an outward general class investor, an outward investing financial entity or an outward investing entity (ADI) but you are not also an inward investing entity for any part of the year, and
• the total of you and your associate’s average Australian assets is equal to or greater than 90% of the total of you and your associate’s total assets.

If section 820-37 applies to you, print X in the Yes box at question 30c – label A then go to question 39a.

Section 820-39 applies to a special purpose entity. An entity is a special purpose entity where all the following is met:

• the entity is established for the purposes of managing some or all of the economic risk associated with assets, liabilities or investments
• the total value of debt interest in the entity is at least 50% of the total value of the entity’s assets
• the entity satisfies the criteria for an insolvency-remote special purpose entity of an internationally recognised rating agency.

If section 820-39 applies to you, print X in the Yes box at question 30c – label B then go to question 35d.

Question 31 Election under subdivision 820-FB

Question 31 is relevant if you are an Australian resident company that has elected under subdivision 820-FB of the ITAA 1997 to treat their qualifying branch operations as part of a consolidated group, multiple entry consolidated (MEC) group or single company for thin capitalisation purposes.

If you carry on qualifying Australian branch operations that your related Australian consolidated group, MEC group or single company has elected under subdivision 820-FB of the ITAA 1997 to treat as part of itself for thin capitalisation purposes, then you will not be required to complete the remaining thin capitalisation questions. This is because the questions must be completed in the return of the head company or the single company on the basis of including your branch operations.

If an Australian resident company has elected under subdivision 820-FB of the ITAA 1997 to treat your qualifying Australian branch operations as part of its consolidated group, MEC group or single company for thin capitalisation purposes:

• print X at the Yes box at question 31 – label A
• write the ABN of the electing Australian company at question 31 – label B and then go to question 40.

If you do carry on qualifying Australian branch operations that are not treated as part of a consolidated group, MEC group or single company by reason of the operation of subdivision 820-FB, you must complete the following thin capitalisation questions for the branch operations.

Question 32 Entity type for the income year

Question 32 requires you to disclose your thin capitalisation entity type for the income year.

The thin capitalisation rules apply differently depending on the type of entity you are. To work out how the thin capitalisation rules apply to a particular entity we need to know which category the entity belongs to.

The new thin capitalisation rules for income years starting on or after 1 July 2023 introduce a new entity type of 'general class investor' under section 820-46 of the ITAA 1997. This effectively consolidates the following 'general' types of entities under the thin capitalisation rules for income years starting before 1 July 2023:

• outward investor (general)
• inward investment vehicle (general)
• inward investor (general).

An entity is a general class investor under section 820-46 of the ITAA 1997 if the entity is not a financial entity or ADI for all the income year and, if it had been a financial entity during the income year, it would be either:

• an outward investing financial entity (non-ADI) under subsection 820-85(2) of the ITAA 1997
• an inward investing financial entity (non-ADI) under subsection 820-185(2), 820-583(4) or 820-609(6) of the ITAA 1997.

An entity will need to be a financial entity or an ADI for an entire income year to be precluded from being a general class investor for the income year.

At question 32 – label A, write the applicable code selected from the below table for the type of thin capitalisation entity you are for the 2023–24 income year or relevant period.

To work out what type of entity you are, see the relevant provisions in Division 820 of the ITAA 1997.

Entities with an 2023–24 income year that starts before 1 July 2023 (early balancers) don't apply the new thin capitalisation rules for 2023–24. If you are an early balancer and you are not an ADI or investing financial entity for the income year, write code 6 or 7 at question 32 – label A.

Question 32a Financial entity type for investing financial entities

Question 32a requires investing financial entities to disclose their relevant category of financial entity under subsection 995-1(1) of the ITAA 1997 for the income year.

If you were an investing financial entity (code 2 or 3 at question 32 - label A), write the applicable financial entity code selected from the table below at question 32a – label  A.

Code a will not be applicable if your income year started on or after 1 July 2023.

Where more than one type of financial entity code applies to you, choose the code that represents the largest proportion of your business as determined on a reasonable basis.

Question 32b Did thin capitalisation amendments apply in 2023–24

Did the thin capitalisation amendments in the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 apply to you in the income year?

Question 32b ascertains if the new thin capitalisation provisions applied to you for 2023–24.

If your 2023–24 income year started on or after 1 July 2023, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (Amending Act) applies to you for 2023–24. Print X in the Yes box at question 32b – label A then go to question 34.

If your 2023–24 income year started before 1 July 2023 (early balancer), then the Amending Act doesn't apply to you for your 2023–24 income year:

• Print X in the No box at question 32b – label A.
• Print the applicable entity code at question 32b – label B selected from the table below.

If you were an Australian plantation forestry entity for the income year, then the Amending Act doesn't apply to you.

An Australian plantation forestry entity is an entity that solely or predominantly carries on a business of establishing and tending trees for felling in Australia. Australian plantation forestry entities are not covered by provisions in the Amending Act.

If you were an Australian plantation forestry entity:

• Print X in the No box at question 32b – label A.
• Print code 11 at question 32b – label B selected from the table below.

Question 33 Change in entity status for early balancers

Question 33 ascertains if you have changed your entity status from general to financial during 2023–24.

Question 33 only applies if you have answered No at question 32b – label A. The new thin capitalisation rules don't include part-year treatment for general class investors.

The thin capitalisation provisions categorise non-ADI entities as either:

• a kind of financial entity (covered by code 2, 4, 6 or 10 at question 32b – label B)
• a kind of general entity (covered by code 1, 3, 5 or 9 at question 32b – label B).

Print X at the Yes box at question 33 – label A, if you have changed your entity type for thin capitalisation from general to financial during 2023–24.

For more information about the different types of thin capitalisation entities, see the provisions in the Early balancing thin capitalisation entity type table.

Question 34 Method for calculating average values

Question 34 seeks to ascertain your method for calculating average values.

At question 34 – label A, write the applicable code from the table below that represents the type of averaging method you used for calculating 'average values'.

For more information about these methods or 'average values', see Division 820 of the ITAA 1997.

Question 35 General information for all thin capitalisation entities

Question 35 requires information for all thin capitalisation entity types. This question requires entities to disclose debt deductions, interest income and average adjusted debt.

You must complete all questions. However, if you have written code 4 or 5 (ADI) at question 32 – label A, you don't need to complete question 35 – label D (adjusted average debt).

Disclosure of debt deductions and interest income is relevant to calculating the ‘net debt deduction’ amount adopted in the new fixed ratio test and group ratio test.

The disclosure of adjusted average debt is retained for risk assessment and evaluation of the new thin capitalisation rules.

The dollar amounts or values asked for in this question are all based on your tax records.

Debt deductions

At question 35 – label A, write the total amount of your debt deductions allowable before applying Division 820 of the ITAA 1997.

At question 35 – label B, write the amount of your debt deductions for any debt interests or financial arrangements held, relating to or ultimately funded (via a back-to-back arrangement) by a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the debt deductions shown at question 35 – label A were for debt interests or financial arrangements held, relating to or ultimately funded by such non-resident entities, write 0 (zero) at question 35 – label B.

If your 2023–24 income year started on or after 1 July 2023, at question 35 – label C, write the amount of your debt deductions that are disallowed for 2023–24 under the following sections if you have written:

• code 1 at question 32 – label A, the amount disallowed under section 820-50
• code 2 at question 32 – label A, the amount disallowed under sections 820-85, 820-115 and 820-120
• code 3 at question 32 – label A, the amount disallowed under sections 820-185, 820-220 and 820-225
• code 4 at question 32 – label A, the amount disallowed under sections 820-325 and 820-330
• code 5 at question 32 – label A, the amount disallowed under sections 820-415 and 820-420.

If you were an early balancer because your 2023–24 income year started before 1 July 2023, at question 35 – label C write the amount of your debt deductions that are disallowed for 2023–24 under the following sections if you have written (legislative references are to the sections before the amendments made in Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024):

• code 1, 2, 9 or 10 at question 32b – label B, the amount disallowed under sections 820-115 and 820-120
• code 3, 4, 5 or 6 at question 32b – label B, the amount disallowed under sections 820-220 and 820-225
• code 7 at question 32b – label B, the amount disallowed under sections 820-325 and 820-330
• code 8 at question 32b – label B, the amount disallowed under sections 820-415 and 820-420.

Adjusted average debt

At question 35 – label D, write the amount of your adjusted average debt for 2023–24 worked out under subsections 820-85(3) or 820-185(3) as relevant.

For general class investors which have written code 1 at question 32 – label A, work out your adjusted average debt by determining your average adjusted debt on a reasonable basis.

Determining your adjusted average debt on a reasonable basis would involve:

• Including both:
  • Debt capital that gives rise to debt deductions
  • Cost-free debt capital.
• If you are a general class investor, determining adjusted average debt on a basis broadly consistent with subsections 820-85(3) and 820-185(3) of the ITAA 1997 as applicable – for example:
  • Reasonable efforts should be made to exclude the value of associate entity debt as would be required under step 2 of the method statements in subsections 820-85(3) and 820-185(3) of the ITAA 1997.
  • If a general class investor would be an outward investing entity (non-ADI) if it had been a financial entity, subsection 820-85(3) of the ITAA 1997 should generally be followed and reasonable efforts made to exclude the value of controlled foreign entity debt.

Interest income and other amounts covered by paragraph 820-50(3)(b)

At question 35 – label E, write the amount of your interest income or other amounts covered by paragraph 820-50(3)(b) for 2023–24.

At question 35 – label F, write the amount of your interest income, or other amounts covered by paragraph 820-50(3)(b) of the ITAA 1997, derived directly or indirectly (via a back-to-back arrangement) from a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the interest income shown at question 35 – label E was for interest income derived from such non-resident entities, write 0 (zero) at question 35 – label F.

For the 2023–24 income year, determine any amounts covered by paragraph 820-50(3)(b) of the ITAA  1997 on a best endeavours basis.

Question 35a Tax EBITDA information

This new question is not required to be completed by early balancing entities using code 6 or 7 at question 32 – label A (early balancing general class investors).

All general class investors are required to disclose their tax EBITDA calculations for risk assessment and evaluation of the new thin capitalisation rules.

Question 35a requires entities to disclose the steps of the ‘tax EBITDA’ calculation in the new thin capitalisation rules. These disclosures don't require any departure from the legislative calculations.

Modified taxable income or loss

At question 35a – label A, write the amount of the entity's taxable income or tax loss for the income year after making the below adjustments. For an AMIT, other trust or a partnership, write the amount of the net income of the entity after making the below adjustments.

In working out your taxable income or tax loss (or net income), disregard the operation of the thin capitalisation rules and make the following adjustments as relevant:

• Assume that you choose to deduct all of your tax losses for loss years occurring before the income year (and that subsection 36-17(5) doesn't apply to that choice) in accordance with subsection 820-52(1A) of ITAA 1997.
• Disregard Division 207 of the ITAA 1997 to the extent it results in an amount of, or a share of, a franking credit being included in the assessable income of an entity in accordance with subsection 820-52(2) of ITAA 1997.
• If you are an R&D entity that is entitled to a notional deduction for an income year under Division 355 of the ITAA 1997 in relation to your R&D activities, subtract an amount equivalent to the amount of the notional deduction in accordance with subsection 820-52(10) of ITAA 1997.
• Disregard distributions or net income from companies, trusts, partnerships and AMITs that are your associate entities in accordance with subsections 820-52(3), 820-52(6), 820-52(6B) and 820-52(8) of ITAA  1997 as applicable. The total of these disregarded amounts are written at question 35a – label G.

If you had a tax loss for the income year after making the above adjustments, print L in the box at the right of question 35a – label A.

Net debt deductions

At question 35a – label B, write the amount of your net debt deductions for the income year calculated under subsection 820-50(3) of the ITAA 1997. For an AMIT, other trust or a partnership, treat net debt deductions as the debt deductions taken into account in working out the net income of the AMIT, other trust or a partnership in accordance with subsections 820-52(4), 820-52(6A) and 820-52(7) of ITAA 1997 as applicable.

If your net debt deductions determined under the above provisions are a negative amount, print L in the box at the right of question 35a – label B.

Modified depreciation and forestry costs

At question 35a – label C, write the total of the following amounts for the income year added under paragraph 820-52(1)I of ITAA 1997:

• Deductions under Division 40 and Division 43 of the ITAA 1997 (other than deductions for the entire amount of an expense incurred by you) – for example, deductions under Subdivision 40-H of the ITAA 1997 are not added under paragraph 820-52(1)I of ITAA 1997.
• General deductions that relate to forestry establishment and preparation costs unless those costs relate to the clearing of native forests.
• Deductions for certain capital costs of acquiring trees under section 70-120 of the ITAA 1997.

Excess tax EBITDA amount

At question 35a – label D, write your excess tax EBITDA amount for the income year as determined under section 820-60 of the ITAA 1997.

Tax EBITDA

At question 35a – label E, write the amount of your tax EBITDA for the income year as determined under section 820-52 of the ITAA 1997 (being the total of the amounts required to be shown at labels A, B, C and D of question 35a).

Fixed ratio earnings limit

At question 35a – label F, write the amount of your fixed ratio earnings limit for the income year as determined under subsection 820-51(1) of the ITAA 1997 (being 30% of Tax EBITDA required to be shown at question 35a –label E).

Total disregarded amounts

At question 35a – label G, write the total of the following amounts:

• Any amount disregarded under subsection 820-52(2) of the ITAA 1997 – about franked distributions.
• Any amount disregarded under subsection 820-52(3) of the ITAA 1997 − about dividends and non-share dividends.
• Any amount disregarded under subsection 820-52(6) of the ITAA 1997 − about trust distributions and the operation of Subdivision 115-C of the ITAA 1997 and Division 6 of the ITAA 1936.
• Any amount disregarded under subsection 820-52(6B) of the ITAA 1997 − about AMIT distributions and the operation of Division 276 of the ITAA 1997.
• Any amount disregarded under subsection 820-52(8) of the ITAA 1997 − about the operation of Division 5 of the ITAA 1936.

Three highest excess tax EBITDA amounts from a controlled entity

At question 35a – label H, write the following information for the 3 highest excess tax-EBITDA amounts transferred from a controlled entity as calculated for each controlled entity under subsection 820-60(3) of the ITAA 1997:

• At question 35a – labels H1a, H2a and H3a, write the name of the controlled entity.
• At question 35a – labels H1b, H2b and H3b, write the corresponding controlled entity's step 1 amount from subsection 820-60(3).
• At question 35a – labels H1c, H2c and H3c, write the corresponding controlled entity's step 3 amount from subsection 820-60(3) divided by 0.3.

Question 35b General class investor

If you were a general class investor and you entered code 1 at question 32, did you rely on the group ratio test?

Question 35b requires entities which have made a choice to apply the group ratio test under subsection 820-46(3) of the ITAA 1997 for the income year to disclose amounts and other information relevant to applying the group ratio test.

These disclosures don't require departure from the legislative calculations.

If you have written code 1 at question 32 – label A and made a choice under subsection 820-46(3) of the ITAA 1997 to apply the group ratio test for the income year, print X in the Yes box at question 35b – label A.

If you have not printed code 1 at question 32 – label A or you have not made a choice under subsection 820-46(3) of the ITAA 1997 to apply the group ratio test in the income year, print X in the No box at question 35b – label A then go to question 35c.

GR group members

At question 35b – label B, write the number of GR group members in your GR group for the income year within the meaning of section 820-53 of the ITAA 1997.

GR group members with less than zero entity EBITDA

At question 35b – label C, write the number of GR group members in your GR group that had an amount of entity EBITDA that was less than zero for the income year as determined in accordance with section 820-55 of the ITAA 1997.

GR group net third party interest expense

At question 35b – label D, write the amount of GR group net third party interest expense for the income year determined in accordance with subsection 820-54(1).

GR group net profit (disregarding tax expenses)

At question 35b – label E, write the amount of GR group net profit (disregarding tax expenses) for the income year determined in accordance with paragraph 820-55(2)(a).

GR group adjusted net third party interest expense

At question 35b – label F, write the amount of GR group adjusted net third party interest expense for the income year determined in accordance with paragraph 820-55(2)(b).

GR group depreciation and amortisation expenses

At question 35b – label G, write the amount of GR group depreciation and amortisation expenses for the income year determined in accordance with paragraph 820-55(2)I.

GR group EBITDA

At question 35b – label H, write the amount of the GR group EBITDA for the income year in accordance with section 820-55 of the ITAA 1997 (being the total of the amounts required to be shown at labels E, F and G of question 35b).

When working out the GR group EBITDA for a period, if a GR group member for the period of the GR group has an entity EBITDA for the period of less than zero, that GR group member’s entity EBITDA is disregarded under subsection 820-55(3) of the ITAA 1997.

Group ratio

At question 35b – label I, write your group ratio for the income year as determined under subsection 820-53(1) of the ITAA 1997 (being your GR group adjusted net third party interest expense required to be shown at question 35b – label F divided by your GR group EBITDA required to be shown at question 35b – label H).

The group ratio should be provided as a whole number (rounding up or down to the closest whole number) expressed as a percentage. For example, write 40 at question 35b – label I if:

• Your GR group adjusted net third party interest expense at question 35b – label F is $40.
• Your GR group EBITDA at question 35b – label H is $100.
• Your group ratio is worked out as:
  • $40 ÷ $100 = 0.4
  • 0.4 × 100 = 40%.

If your GR group EBITDA is zero, write 0 at question 35b – label I.

You are required to provide a whole number only for reporting purposes at question 35b – label I. When calculating your group ratio earnings limit at question 35b – label J, use your group ratio calculated without any rounding in accordance with the requirements of subsections 820-51(2) and 820-53(1) of the ITAA 1997.

Group ratio earnings limit

At question 35b – label J, write the amount of your group ratio earnings limit for the income year as determined under subsection 820-51(2) of the ITAA 1997 (being your group ratio at question 35c – label I multiplied by your tax EBITDA at question 35a – label E).

Three GR group members with highest entity EBITDA amounts

At question 35b – label K, write the following information and amounts for your 3 GR group members with the highest amount of entity EBITDA determined in accordance with section 820-55 of the ITAA 1997:

• At question 35b – labels K1a, K2a and K3a, write the name of each GR group member with the 3 highest amounts of entity EBITDA.
• At question 35b – labels K1b, K2b and K3b, write the amount of entity EBITDA determined in accordance with section 820-55 of the ITAA 1997 of the corresponding GR group member with the 3 highest amounts of entity EBITDA.
• At question 35b – labels K1c, K2c and K3c, write the amount of adjusted net third party interest expense under paragraph 820-55(1)(b) of the ITAA 1997 of the corresponding GR group member with the 3 highest amounts of entity EBITDA.
• At question 35b – labels K1d, K2d and K3d, write the Appendix 2 jurisdiction code for the tax residency jurisdiction of the corresponding GR group member with the 3 highest amounts of entity EBITDA.

Question 35c Third party debt test

If you entered code 1, 2, or 3 at question 32, did you rely on the third party debt test?

Question 35c requires entities which have made, or are taken to have made, a choice to apply the third party debt test under subsection 820-46(4) or subsection 820-46(5) of the ITAA 1997 to disclose amounts and other information relevant to applying the third party debt test.

These disclosures don't require departure from the legislative calculations and conditions for relying on the third party debt test.

A general class investor (code 1 at question 32 – label A) is taken to have made a choice to use the third party debt test under subsection 820-46(5) of the ITAA 1997 for an income year if section 820-48 of the ITAA 1997 applies to the entity for the income year.

The scenarios in which section 820-48 of the ITAA 1997 applies to the entity for the income year include where the entity:

• is an ‘associate entity’ in the ‘obligor group’ of another entity that has made a choice to apply the third party debt test to a debt interest issued by that entity. section 820-48 of the ITAA 1997 uses a modified definition of associate entity based on a ‘TC control interest’ of 20% or more.
• has entered into a cross staple arrangement with an entity that has made a choice to apply the third-party debt test.

If an entity is taken to have made a choice to apply the third-party debt test under subsection 820-46(5) of the ITAA 1997 for an income year then under subsection 820-47(4A) of the ITAA 1997, the entity can't make a choice under subsection 820-46(3) of the ITAA 1997 to use the group ratio test and any existing choice to use the group ratio test in relation to that income year is revoked and taken to never have been made.

If you have printed code 1, 2 or 3 at question 32 – label A and have made, or are taken to have made, a choice to apply the third party debt test under subsection 820-46(4) or subsection 820-46(5) of the ITAA 1997, print X in the Yes box at question 35c – label A and complete the required labels of question 35c.

If you have not printed code 1, 2 or 3 at question 32 – label A or you have neither made, nor are taken to have made, a choice to apply the third party debt test under subsection 820-46(4) or subsection 820-46(5) of the ITAA 1997, print X in the No box at question 35c – label A then go to question 35d.

At question 35c – label B, print the code indicating the kind of choice to apply the third party debt test that was applicable to you as selected from the table below.

Third party earnings limit

At question 35c – label C, write the amount of your third party earnings limit under section 820-427A of the ITAA 1997.

Credit support rights

Question 35c – label D asks:

Did the holder of a debt interest issued by you that satisfies the third party debt conditions have recourse to Australian assets that were rights that satisfy paragraphs 820-427A(5)(a) and (b)?

Print X in the Yes box at question 35c – label D if the holder of a debt interest issued by you that satisfied the third party debt conditions in subsection 820-427A(3) had recourse to rights meeting the requirements in paragraphs 820-427A(5)(a) and (b) of the ITAA 1997.

Print X in the No box at question 35c – label D if none of the holders of a debt interest issued by you that satisfied the third party debt conditions in subsection 820-427A(3) had recourse to rights meeting the requirements in paragraphs 820-427A(5)(a) and (b) of the ITAA 1997.

Australian assets of other obligor group members

Question 35c – label E asks:

Did the holder of a debt interest issued by you that satisfies the third party debt conditions have recourse to Australian assets held by another member of the obligor group in relation to the debt interest?

This question requires you to identify if there were Australian assets covered by paragraph 820-427A(4)(c) of the ITAA 1997 to which the holder of the debt interest issued by you had recourse.

Paragraph 820-427A(4)(c) of the ITAA 1997 covers Australian assets held by an Australian entity (excluding membership interests in the borrower) that is a member of the obligor group in relation to the debt interest. The meaning of obligor group is provided in section 820-49 of the ITAA 1997 and includes an entity which has assets to which the creditor has recourse for payment of the debt.

Print X in the Yes box at question 35c – label E if the holder of a debt interest issued by you (satisfying the third party debt conditions) had recourse to Australian assets which were held by another member of the obligor group in relation to the debt interest.

Print X in the No box at question 35c – label E if none of the holders of a debt interest issued by you (satisfying the third party debt conditions) had recourse to Australian assets which were held by another member of the obligor group in relation to the debt interest.

Membership interests in the borrower

Question 35c – label F asks:

Did the holder of a debt interest issued by you have recourse to assets that were membership interests in you that satisfy paragraph 820-427A(4)(b)?

This question requires you to identify if there were Australian assets covered by paragraph 820-427A(4)(b) of the ITAA 1997 to which the holder of the debt interest issued by you had recourse.

Paragraph 820-427A(4)(b) of the ITAA 1997 covers Australian assets that are membership interests in the entity (unless the entity has a legal or equitable interest, whether directly or indirectly, in an asset that is not an Australian asset).

Print X in the Yes box at question 35c – label F if the holder of a debt interest issued by you (satisfying the third party debt conditions) had recourse to assets that were membership interests in you that satisfied paragraph 820-427A(4)(b) of the ITAA 1997.

Print X in the No box at question 35c – label F if none of the holders of a debt interest issued by you (satisfying the third party debt conditions) had recourse to assets that were membership interests in you that satisfied paragraph 820-427A(4)(b) of the ITAA 1997.

Minor or insignificant assets

Question 35c – label G asks:

Did the holder of a debt interest, that satisfies the third party debt conditions, have recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c)?

If the holder of a debt interest issued by you that satisfies the third party debt conditions, had recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c) of the ITAA 1997:

• Print X in the Yes box at question 35c – label G.
• Write at question 35c – label H the total value of all minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c) of the ITAA 1997.

Print X in the No box at question 35c – label G if none of the holders of a debt interest issued by you that satisfies the third party debt conditions had recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c) of the ITAA 1997.

Conduit Financing Conditions

Question 35c – labels I to O require entities to provide information in relation to the conduit financing conditions in the third party debt test.

You had a conduit financing arrangement for the income year if both of the following apply:

• all of the conditions in subsection 820-427C(1) of the ITAA 1997 are satisfied in relation to the income year
• you were a conduit financer, conduit borrower or a borrower as defined in subsection 820-427C(1) of the ITAA 1997.

Print X in the Yes box at question 35c – label I if you had a conduit financing arrangement satisfying the requirements of subsection 820-427C(1) of the ITAA 1997 for the 2023–24 income year.

Print X in the No box at question 35c – label I if you didn't have a conduit financing arrangement satisfying the requirements of subsection 820-427C(1) of the ITAA 1997 for the 2023–24 income year, then go to question 35c – label P.

If you were the conduit financer

If you were a conduit financer for the conduit financing arrangement within the meaning of subsection 820-427C(1) of the ITAA 1997, print X in the Yes box at question 35c – label J then go to question 35c – label L.

ABN of the conduit financer

If you were not the conduit financer for the conduit financing arrangement within the meaning of subsection 820-427C(1) of the ITAA 1997:

• Print X in the No box at question 35c – label J.
• Write the ABN of the conduit financer at question 35c – label K.
• Then go to question 35c – label N.

Same terms requirement of a conduit financer

Question 35c – label  L asks:

If you were the conduit financer, did the terms of each relevant debt interest held by you, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest?

In order for the modified third party conditions for a conduit financing arrangement in section 820-427B of the ITAA 1997 to apply, the arrangement must satisfy the condition in paragraph 820-427C(1)(d) of the ITAA 1997 that the terms of the relevant debt interest, to the extent that those terms relate to costs incurred, are the same as the terms of the ultimate debt interest.

Subsection 820-427C(2) of the ITAA 1997 disregards certain terms of a debt interest for the purpose of applying this ‘same terms’ condition in paragraph 820-427C(1)(d) of the ITAA 1997.

If you were the conduit financer within the meaning of subsection 820-427C(1) of the ITAA 1997, and the terms of a relevant debt interest you held, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest:

• Print X in the Yes box at question 35c – label L.
• At question 35c – label M, write the applicable code for the type of terms of the relevant debt interest that were disregarded as selected from the table below.
• Then go to question 35c – label P.

Table: Type of financing arrangements

If you were the conduit financer within the meaning of subsection 820-427C(1) of the ITAA 1997 and the terms of a relevant debt interest you held, to the extent that those terms relate to costs incurred, did not differ from the terms of the ultimate debt interest, print X in the No box at question 35c – label L then go to question 35c – label P.

Same terms requirement of a borrower

Question 35c – label N asks:

If you were not the conduit financer, did the terms of the relevant debt interest issued by you, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest?

In order for the modified third party conditions for a conduit financing arrangement in section 820-427B of the ITAA 1997 to apply, the arrangement must satisfy the condition in paragraph 820-427C(1)(d) of the ITAA 1997 that the terms of the relevant debt interest, to the extent that those terms relate to costs incurred, are the same as the terms of the ultimate debt interest.

Subsection 820-427C(2) of the ITAA 1997 disregards certain terms of a debt interest for the purpose of applying this ‘same terms’ condition in paragraph 820-427C(1)(d) of the ITAA 1997.

If you were the conduit borrower or the borrower within the meaning of subsection 820-427C(1) of the ITAA, and the terms of a relevant debt interest you issued, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest:

• Print X in the Yes box at question 35c – label N.
• At question 35c – label O, write the applicable code for the type of terms of the relevant debt interest that were disregarded as selected from the table below.
• Then go to question 35c – label P.

Table: Type of financing arrangements

Print X in the No box at question 35c – label N if you are the conduit borrower or the borrower within the meaning of subsection 820-427C(1) of the ITAA, and the terms of a relevant debt interest you issued, to the extent that those terms relate to costs incurred, didn't differ from the terms of the ultimate debt interest. Then go to question 35c – label P.

Cross-staple arrangements

Question 35c – label P asks:

Were you a party to one or more cross-staple arrangements in effect during the income year?

See section 12-436 of Schedule 1 to the Taxation Administration Act 1953 for what constitutes a cross staple arrangement.

Print X in the Yes box at question 35c – label P if you have one or more cross-staple arrangements in effect during the income year.

Print X in the No box at question 35c – label P if you don't have any cross-staple arrangements in effect during the income year.

Obligor group membership

Question 35c – label Q asks:

Were you a member of an obligor group in relation to a debt interest not issued by you?

This question requires you to identify if you were a member of an obligor group within the meaning of section 820-49 of the ITAA 1997.

Section 820-49 provides that you are a member of an obligor group in relation to a debt interest if the creditor of that debt interest has recourse to one or more of your assets (disregarding assets that are membership interests in the borrower) for payment of the debt to which the debt interest relates.

Print X in the Yes box at question 35c – label Q if you were a member of an obligor group in relation to a debt interest not issued by you.

Print X in the No box at question 35c – label Q if you were not a member of an obligor group in relation to a debt interest not issued by you.

Question 35d Special purpose vehicles

Were you or a member of your tax consolidated group, a special purpose vehicle subject to section 820-39 of the ITAA 1997?

In order to evaluate the exemption provided to certain special purpose entities in subdivision 820-AA of the ITAA 1997, question 35d requires certain information if you, or a member of your tax consolidated group, were a special purpose entity covered by section 820-39 of the ITAA 1997.

Print X in the Yes box at question 35d – label A if you, or a member of your tax consolidated group, were a special purpose vehicle subject to section 820-39 of the ITAA 1997 for the income year and complete the required fields.

Print X in the No box at question 35d – label A if neither you, nor a member of your tax consolidated group, were a special purpose vehicle subject to section 820-39 of the ITAA 1997 for the income year, then go to question 36.

Debt deductions

At question 35d – label B, write the total amount of debt deductions of your special purpose vehicle (ignoring the operation of Division 820).

At question 35d – label C, write the amount of the debt deductions of your special purpose vehicle for any debt interests or financial arrangements held, relating to or ultimately funded (via a back-to-back arrangement) by a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the debt deductions of your special purpose vehicle shown at question 35d – label B were for debt interests or financial arrangements held, relating to or ultimately funded by such related non-resident entities, write 0 (zero) at question 35d – label C.

Average debt amount

At question 35d – label D, write the average debt amount of your special purpose vehicle. ‘Average debt amount’ is not as specific as ‘adjusted average debt’. You should calculate the average debt amount of your special purpose vehicle on a reasonable basis.

For example, a reasonable basis for calculating the average debt amount of your special purpose vehicle would be to determine the average quarterly balance of all debt interests on issue by your special purpose vehicle during the income year, regardless of any costs associated with these debt interests, consistently with the below method in the Local File – Part A instructions.

• Add up the amount of:
  • the balance of the borrowing, or
  • the price or value of the debt interest (as relevant)
• based on your accounting records (including the amount of any debt interest treated as equity for accounting purposes) at the start of the year and at the end of each quarter.
• Divide the result by five.
• Only positive amounts should be reported.

Interest income and other amounts covered by paragraph 820-50(3)(b)

At question 35d – label E, write the amount of the interest income or other amounts covered by paragraph 820-50(3)(b) of your special purpose vehicle.

At question 35d – label F, write the amount of interest income, or other amounts covered by paragraph 820-50(3)(b) of the ITAA 1997, derived by your special purpose vehicle directly or indirectly (via a back-to-back arrangement) from a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the interest income shown at question 35d – label E was for interest income derived from such non-resident entities, write 0 (zero) at question 35d – label F.

You can determine any amounts covered by paragraph 820-50(3)(b) of the ITAA 1997 on a best endeavours basis.

Question 36 Authorised deposit taking institutions (ADIs)

Question 36 requires information if you were an authorised deposit taking institution (ADI).

If you were an ADI for the 2023–24 income year and have printed code 4 or 5 at question 32 – label A, print X in the Yes box at question 36– label A and complete the required fields.

If you were an ADI for the 2023–24 income year, print X in the No box at question 36 – label A then go to question 37.

If you have printed code 4 (outward investing entity (ADI)) at question 32 – label A write the following amounts at question 36:

• At label B, write the amount of your adjusted average equity capital worked out under subsection 820-300(3).
• At label C, write your safe harbour capital amount determined under section 820-310. If you have calculated a safe harbour capital amount and relied on the arm’s length method or world-wide capital method, write the amount you calculated for the safe harbour capital amount at label C.
• At label D, write the amount by which your minimum capital amount determined under section 820-305 exceeds the amount of your adjusted average equity capital written at label B.
• At label E, write the amount of the average value of risk-weighted assets that you include in step 1 in section 820-310 (after excluding the value of risk-weighted assets attributable to the assets specified in paragraphs (a), (b) and (c) of step 1 in section 820-310).
• At label F, write the amount of ADI equity capital attributable to your overseas permanent establishments that you were required, under paragraph 820-300(3)(a), to subtract in determining the amount of adjusted average equity capital you had to write at question 36 – label B.
• At label G, write the amount of the average value of your total risk-weighted assets, used to work out your Tier 1 capital reported to APRA for your ADI group, attributable to your overseas permanent establishments that you were required, under paragraph (a) of step 1 in section 820-310, to subtract in determining the amount of the average value of risk-weighted assets you had to write at question 36 – label E.
• At label H, write the amount of the average value of all your controlled foreign entity equity, within the meaning of section 820-890, that you were required, under paragraph 820-300(3)(b), to subtract in determining the amount of adjusted average equity capital you had to write at question 36 – label B.
• At label I, write the amount of tier 1 prudential capital deductions that you include in step 3 in section 820-310.

If you have written code 5 (inward investing entity (ADI)) at question 32 – label A write the following amounts at question 36:

• At label B, write the amount of the average equity capital worked out under subsection 820-395(3).
• At label C, write your safe harbour capital amount determined under section 820-405. If you have calculated a safe harbour capital amount and relied on the arm’s length method, write the amount you calculated for the safe harbour capital amount at label C.
• At label D, write the amount by which your minimum capital amount determined under section 820-400 exceeds the amount of your average equity capital written at label B.
• At label J, write the amount of the average value of all your risk weighted assets attributable to your Australian permanent establishments (but after excluding those assets which are attributable to offshore banking activities) that you include in step 1 of section 820-405.
• At label K, write the amount of the average value of the total amounts you have made available to your Australian permanent establishments, that will never give rise to any debt deductions, that you are entitled to include, under paragraph 820-395(3)(b), in working out the amount of average equity capital you had to write at question 36 – label B.

Question 37 Early balancer non-ADIs and non-financial entities

Question 37 requires information regarding early balancing general entities (you printed code 6 or 7 at question 32 – label A) and Australian plantation forestry entities (you printed code 11 at question 32b – label B).

If you are an early balancing general entity or an Australian plantation forestry entity, print X in the Yes box at question 37 – label A and complete the following required fields.

If you have printed code 1, 2, 3, 4 or 5 at question 32 – label A, print X in the No box at question 37 – label A then go to question 37a.

At question 37 – label B, write the amount of the average value of your assets included in step 1 of the following sections if you have printed:

• code 1 or 9 at question 32b – label B, under section 820-95
• code 2 or 10 at question 32b – label B, under section 820-100
• code 3 at question 32b – label B, under section 820-195
• code 4 at question 32b – label B, under section 820-200
• code 5 at question 32b – label B, under section 820-205
• code 6 at question 32b – label B, under section 820-210.

If you have printed code 11 at question 32b – label B, use the section that applies to you as if you were an early balancer and not an Australian plantation forestry entity.

At question 37 – label C, write the total asset revaluation amount by which your assets have been revalued for thin capitalisation purposes for 2023–24, excluding your financial assets within the meaning of AASB 132 Financial Instruments: Presentation.

The total asset revaluation amount includes any increases in the value of assets which are recorded at fair value in your accounting records net of subsequent depreciations in 2023–24 (this asset revaluation amount must be included in the amount you write at question 37 – label B), which is an increase in the value of your assets that:

• gives rise to an increase in the amount of the average value of your assets, for thin capitalisation purposes, as a result of an upward revaluation in 2023–24, and
• was not reversed in its entirety before or on the next thin capitalisation measurement day following the upward revaluation.

You would therefore include an upward revaluation that had taken place on 1 October 2023, and which has not been reversed as at the following thin capitalisation measurement day on 31 December 2023, where the '3 measurement days method' is used for 2023–24.

An increase in the value of mining rights as a result of an upward revaluation must not be netted off against a decrease in the value of any other assets as a result of downward revaluation. For example, if there was an increase of $18 million in the value of your mining rights as a result of an upward revaluation and a decrease of $15 million in the value of your other assets such as land and buildings as a result of downward revaluations, you show a total asset revaluation amount of $18 million at question 37 – label C (not $3 million).

At question 37 – label D, if you have printed:

• Code 1, 2, 9 or 10 at question 32b – label B, write your safe harbour debt amount determined under section 820-95 (code 1 or 9) or section 820-100 (code 2 or 10). If you have calculated a safe harbour debt amount and relied on the arm’s length method or world-wide gearing method, write the amount you calculated for the safe harbour debt amount at label D.
• Code 3, 4, 5, or 6 at question 32b – label B, write your safe harbour debt amount determined under section 820-195 (code 3), section 820-200 (code 4), section 820-205 (code 5), or section 820-210 (code 6). If you have calculated a safe harbour debt amount and relied on the arm’s length method or world-wide gearing method write the amount you calculated for the safe harbour debt amount at label D.

At question 37 – label E, then write the amount by which your adjusted average debt written at question 35 – label D exceeds your maximum allowable debt determined under section 820-90 (codes 1, 2, 9 and 10) or section 820-190 (codes 3, 4, 5 and 6).

At question 37 – label F, write the amount of the average value of your non-debt liabilities, as defined in subsection 995-1(1), which you must subtract in determining your safe harbour debt amount as follows if you have printed:

• code 1 or 9 at question 32b – label B, subtracted in step 6 of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 6 of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 4 of section 820-195
• code 4 at question 32b – label B, subtracted in step 4 of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 4 of section 820-205
• code 6 at question 32b – label B, subtracted in step 4 of subsection 820-210(2).

At question 37 – label G, write the amount of the average value of your associate entity debt, within the meaning of section 820-910, which you must subtract in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 1 or 9 at question 32b – label B, subtracted in step 2 of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 2 of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 2 of section 820-195
• code 4 at question 32b – label B, subtracted in step 2 of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 2 of section 820-205
• code 6 at question 32b – label B, subtracted in step 2 of subsection 820-210(2).

At question 37 – label H, write the amount of the average value of your associate entity equity, within the meaning of section 820-915, which you must subtract in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 1 or 9 at question 32b – label B, subtracted in step 3 of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 3 of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 3 of section 820-195
• code 4 at question 32b – label B, subtracted in step 3 of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 3 of section 820-205
• code 6 at question 32b – label B, subtracted in step 3 of subsection 820-210(2).

At question 37 – label I, write the amount of the average value of your associate entity excess amount, within the meaning of section 820-920, which you must add in working out your safe harbour debt amount if you have printed the following codes ( note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 1 or 9 at question 32b – label B, added in step 8 of section 820-95
• code 2 or 10 at question 32b – label B, added in step 10 of subsection 820-100(2)
• code 3 at question 32b – label B, added in step 6 of section 820-195
• code 4 at question 32b – label B, added in step 8 of subsection 820-200(2)
• code 5 at question 32b – label B, added in step 6 of section 820-205
• code 6 at question 32b – label B, added in step 8 of subsection 820-210(2).

At question 37 – label J, write the amount of the average value of your excluded equity interests, within the meaning of section 820-946, which you must subtract in working out your safe harbour debt amount as follows if you have printed:

• code 1 or 9 at question 32b – label B, subtracted in step 1A of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 1A of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 1A of section 820-195
• code 4 at question 32b – label B, subtracted in step 1A of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 1A of section 820-205
• code 6 at question 32b – label B, subtracted in step 1A of subsection 820-210(2).

Question 37 – labels K and L have been retained but it is not anticipated early balancing general entities will be required to disclose at these labels. If you consider that disclosure is necessary, see the instructions for question 37a – labels K and L.

If you have printed code 1,2, 9 or 10 at question 32b – label B, then at question 37 – label M write the average value of all your controlled foreign entity equity, within the meaning of section 820-890, which you must subtract in working out your safe harbour debt amount if you have printed:

• code 1 or 9 at question 32b – label B, subtracted in step 5 of subsection 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 5 of subsection 820-100(2).

If you have printed code 1, 2, 9 or 10 at question 32b – label B, then at question 37 – label N write the average value of all your controlled foreign entity debt, within the meaning of section 820-885, which you must subtract in working out your safe harbour debt amount if you have written:

• code 1 or 9 at question 32b – label B, subtracted in step 4 of subsection 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 4 of subsection 820-100(2).

Question 37a Investing financial entities

Question 37a requires information if you were an investing financial entity (non-ADI).

If you were an investing financial entity (non-ADI) for the income year and have printed code 2 or 3 (non-ADI financial entity) at question 32 – label A, answer Yes at question 37a – label A and complete the following fields.

If you are an 2023–24 early balancing investing financial entity and have written code 2, 4, 6 or 10 at question 32b – label B, disregard references below to the third party debt test as it does not apply to you until your 2024–25 income year starting on or after 1 July 2023.

If you have printed code 1, 4, 5, 6 or 7 at question 32 – label A, answer No at question 37a – label A then go to question 38.

At question 37a – label B, write the amount of the average value of your assets included in step 1 of the following sections if you have printed:

• code 2 at question 32 – label A, under section 820-100
• code 3 at question 32 – label A, under section 820-200 (inward investment vehicle (financial) or 820-210 (inward investor (financial)).

At question 37a – label C, write the total asset revaluation amount by which your assets have been revalued for thin capitalisation purposes for 2023–24, excluding your financial assets within the meaning of AASB 132 Financial Instruments: Presentation.

The total asset revaluation amount includes any increases in the value of assets which are recorded at fair value in your accounting records net of subsequent depreciation in 2023–24 (this asset revaluation amount must be included in the amount you write at question 37 – label B), which is an increase in the value of your assets that:

• gives rise to an increase in the amount of the average value of your assets, for thin capitalisation purposes, as a result of an upward revaluation in 2023–24, and
• was not reversed in its entirety before or on the next thin capitalisation measurement day following the upward revaluation.

You would therefore include an upward revaluation that had taken place on 1 October 2023 and which has not been reversed as at the following thin capitalisation measurement day on 31 December 2023, where the '3 measurement days method' is used for 2023–24.

At question 37a – label D, if you have printed:

• Code 2 at question 32 – label A, write your safe harbour debt amount determined under section 820-100. If you have calculated a safe harbour debt amount and relied on the third party debt test or world-wide gearing method, write the amount you calculated for the safe harbour debt amount at label D.
• Code 3 at question 32 – label A, write your safe harbour debt amount determined under section 820-200 (inward investment vehicle (financial) or 820-210 (inward investor (financial)). If you have calculated a safe harbour debt amount and relied on the third party debt test or world-wide gearing method, write the amount you calculated for the safe harbour debt amount at label D.

At question 37a – label E, write the amount by which your adjusted average debt written at question 35 – label D exceeds your maximum allowable debt determined under section 820-90 (code 2) or section 820-190 (code 3).

At question 37a – label F, write the amount of the average value of your non-debt liabilities, as defined in subsection 995-1(1), which you must subtract in determining your safe harbour debt amount as follows if you have written:

• code 2 at question 32 – label A, subtracted in step 6 of subsection 820-100(2)
• code 3 at question 32 – label A, subtracted in step 4 of subsection 820-200(2) (inward investment vehicle (financial) or 820-210(2) (inward investor (financial)).

At question 37a – label G, write the amount of the average value of your associate entity debt, within the meaning of section 820-910, which you must subtract in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 2 at question 32 – label A, subtracted in step 2 of subsection 820-100(2)
• code 3 at question 32 – label A, subtracted in step 2 of subsection 820-200(2) (inward investment vehicle (financial) or 820-210(2) (inward investor (financial)).

At question 37a – label H, write the amount of the average value of your associate entity equity, within the meaning of section 820-915, which you must subtract in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 2 at question 32 – label A, subtracted in step 3 of subsection 820-100(2)
• code 3 at question 32 – label A, subtracted in step 3 of subsection 820-200(2) (inward investment vehicle (financial) or 820-210(2) (inward investor (financial)).

At question 37a – label I, write the amount of the average value of your associate entity excess amount, within the meaning of section 820-920, which you must add in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 2 at question 32 – label A, added in step 10 of subsection 820-100(2)
• code 3 at question 32 – label A, added in step 8 of subsection 820-200(2) (inward investment vehicle (financial) or 820-210(2) (inward investor (financial)).

At question 37a – label J, write the amount of the average value of your excluded equity interests, within the meaning of section 820-946, which you must subtract in working out your safe harbour debt amount as follows if you have printed:

• code 2 at question 32 – label A, subtracted in step 1A of subsection 820-100(2)
• code 3 at question 32 – label A, subtracted in step 1A of subsection 820-200(2) (inward investment vehicle (financial) or 820-210(2) (inward investor (financial)).

At question 37a – label K, write the average value of your zero capital amount, within the meaning of section 820-942, which you must subtract in working out your safe harbour debt amount as follows if you have printed:

• code 2 at question 32 – label A, subtracted in step 7 of subsection 820-100(2)
• code 3 at question 32 – label A, subtracted in step 5 of 820-200(2) (inward investment vehicle (financial) or 820-210(2) (inward investor (financial)).

At question 37a – label L, write the average value of your on-lent amount, as defined in subsection 995-1(1), which you must subtract in working out your safe harbour debt amount as follows if you have printed:

• code 2 at question 32 – label A, subtracted in step 6 of subsection 820-100(3)
• code 3 at question 32 – label A, subtracted in step 4 of subsection 820-200(3) (inward investment vehicle (financial) or 820-210(3) (inward investor (financial)).

If you have printed code 2 at question 32 – label A, at question 37a – label M write the average value of all your controlled foreign entity equity, within the meaning of section 820-890, which you must subtract in step 5 of subsection 820-100(2) in working out your safe harbour debt amount.

If you have printed code 2 at question 32 – label A, at question 37a – label N write the average value of all your controlled foreign entity debt, within the meaning of section 820-885, which you must subtract in step 4 of subsection 820-100(2) in working out your safe harbour debt amount.

Question 38 Arm's length tests for early balancers

Question 38 only applies to you if you have either:

• Printed code 2, 3, 6 or 7 at question 32 – label A and written No at question 32b – label A.
• Printed code 11 at question 32b – label B (you are an Australian plantation forestry entity).

If you did rely on an arm's length debt amount calculated under Division 820 of the ITAA 1997:

• Print X at the Yes box at question 38 – label A.
• At question 38 – label B, write the arm's length debt amount determined under the applicable section in the below table.

If you printed code 11 at question 32b – label B, use the section in the below table that would apply to you if you were an 2023–24 early balancer and not an Australian plantation forestry entity.

If you didn't rely on an arm's length debt amount calculated under Division 820 of the ITAA 1997, Print X at the No box at question 38 - label A then go to question 38a.

Question 38a Arm's length capital test for ADIs

Question 38a only applies to you if you were an ADI for the 2023–24 income year and have printed code 4 or 5 at question 32 – label A.

If you relied on the arm's length capital amount calculated under Division 820 of the ITAA 1997:

• Print X at the Yes box at question 38a – label A.
• Write at question 38a – label B the arm's length capital amount determined under the following section if you have written:
  • code 4 at question 32 – label A, determined under section 820-315
  • code 5 at question 32 – label A, determined under section 820-410.

If you didn't rely on the arm's length capital amount under Division 820 of the ITAA 1997, Print X at the No box at question 38a – label A and go to question 39.

Question 39 Worldwide gearing debt/capital tests

Question 39 requires information if you have relied on the worldwide gearing debt and capital amount.

This question only applies to:

• ADIs (code 4 or 5 at question 32 – label A).
• Financial entities (code 2 or 3 at question 32 – label A).
• Australian plantation forestry entities (code 11 at question 32b – label B).
• Early balancing general entities (code 6 or 7 at question 32 – label A).

If you are an Australian plantation forestry entity, follow the instructions for the relevant entity type you would be if you were an 2023–24 early balancer and not an Australian plantation forestry entity.

Early balancing entities

If you are an early balancing entity, use the following instructions for the 2023–24 income year.

If you have printed code 8 at question 32b – label B, you don't need to complete this question. Go to Question 40.

You must answer Yes at question 39 – label A and complete all the applicable fields at question 39 if you relied on the worldwide gearing debt test or worldwide capital test under the following sections if you have printed at question 32b – label B:

• code 1 or 2 (outward investor (non-ADI)) at question 32b – label B and you relied on the worldwide gearing debt amount as calculated in subsection 820-110(1) or subsection 820-110(2)
• code 3, 4, 5 or 6 (inward investing entities (non-ADI)) at question 32b – label B and you relied on the worldwide gearing debt amount as calculated in section 820-216, section 820-217, section 820-218 or section 820-219
• code 7 (outward investing entity (ADI)) at question 32b – label B and you relied on the worldwide capital amount as calculated in section 820-320
• code 9 or 10 (inward investment vehicle and is also outward investor (non-ADI)) at question 32b – label B and you relied on the worldwide gearing debt amount as calculated in subsection 820-111(1) or subsection 820-111(2).

If you printed code 7 (outward investing entity (ADI)) at question 32b – label B write:

• At label B, the worldwide group capital ratio worked out in accordance with subsection 820-320(3) – for example, if the amount worked out under step 1 of the method statement in subsection 820-320(3) is 5.42% of the amount worked out under step 2, the decimal number you write at label B is 0.05420.
• At label C, your worldwide capital amount worked out under subsection 820-320(2).

If you print code 1 or 2 (outward investor (non-ADI)) at question 32b – label B, write:

• At label D, the amount of your worldwide debt, as defined in subsection 995-1(1), used to calculate the result of step 1 in the following subsections if you printed      
  • code 1 at question 32b – label B, step 1 in subsection 820-110(1)
  • code 2 at question 32b – label B, step 1 in subsection 820-110(2).
• At label E, the amount of your worldwide equity, as defined in subsection 995-1(1), used to calculate the result of step 1 in the following subsections if you printed      
  • code 1 at question 32b – label B, step 1 in subsection 820-110(1)
  • code 2 at question 32b – label B, step 1 in subsection 820-110(2).
• At label F, your worldwide gearing debt amount worked out under the following subsections if you printed      
  • code 1 at question 32b – label B, under subsection 820-110(1)
  • code 2 at question 32b – label B, under subsection 820-110(2).

If you printed code 3, 4, 5 or 6 (inward investing entity (non-ADI)), or code 9 or 10 (inward investment vehicle which is also an outward investor (non-ADI)) at question 32b – label B write:

• At label D, the amount of your statement worldwide debt, as defined in subsection 995-1(1), used to calculate the result of step 1 in the following sections if you printed      
  • code 3 at question 32b – label B, step 1 in section 820-216
  • code 4 at question 32b – label B, step 1 in section 820-217
  • code 5 at question 32b – label B, step 1 in section 820-218
  • code 6 at question 32b – label B, step 1 in section 820-219
  • code 9 at question 32b – label B, step 1 in subsection 820-111(1)
  • code 10 at question 32b – label B, step 1 in subsection 820-111(2).
• At label E, the amount of your statement worldwide equity, as defined in subsection 995-1(1), used to calculate the result of step 1 in the following sections if you printed      
  • code 3 at question 32b – label B, step 1 in section 820-216
  • code 4 at question 32b – label B, step 1 in section 820-217
  • code 5 at question 32b – label B, step 1 in section 820-218
  • code 6 at question 32b – label B, step 1 in section 820-219
  • code 9 at question 32b – label B, step 1 in subsection 820-111(1)
  • code 10 at question 32b – label B, step 1 in subsection 820-111(2).
• At label F, your worldwide gearing debt amount worked out under the following sections if you printed      
  • code 3 at question 32b – label B, under section 820-216
  • code 4 at question 32b – label B, under section 820-217
  • code 5 at question 32b – label B, under section 820-218
  • code 6 at question 32b – label B, under section 820-219
  • code 9 at question 32b – label B, under subsection 820-111(1)
  • code 10 at question 32b – label B, under subsection 820-111(2).
• At label G, the amount of your statement worldwide assets, as defined in subsection 995-1(1), for the purpose of applying subsection 820-90(3) if you printed      
  • code 3 at question 32b – label B, and have applied section 820-216
  • code 4 at question 32b – label B, and have applied section 820-217
  • code 5 at question 32b – label B, and have applied section 820-218
  • code 6 at question 32b – label B, and have applied section 820-219
  • code 9 at question 32b – label B, and have applied subsection 820-111(1)
  • code 10 at question 32b – label B, and have applied subsection 820-111(2).
• At label H, the amount of your average Australian assets, as defined in subsection 995-1(1), for the purpose of applying subsection 820-90(3) if you printed      
  • code 3 at question 32b – label B, and have applied section 820-216
  • code 4 at question 32b – label B, and have applied section 820-217
  • code 5 at question 32b – label B, and have applied section 820-218
  • code 6 at question 32b – label B, and have applied section 820-219
  • code 9 at question 32b – label B, and have applied subsection 820-111(1)
  • code 10 at question 32b – label B, and have applied subsection 820-111(2).

Income years starting on or after 1 July 2023

The following instructions apply if you are not an 2023–24 early balancing entity because your 2023–24 income year started on or after 1 July 2023.

If you have printed codes 1 or 5 at question 32 – label A, don't complete this question. Go to Question 39a.

If you have printed codes 2, 3 or 4 at question 32 – label A and relied on worldwide gearing debt test or worldwide capital test, answer Yes at question 39 – label A and complete the following relevant fields:

If you printed code 2 at question 32 – label A (outward investing financial entity (non-ADI) that is not an inward investing financial entity (non-ADI)), write:

• at label D, the amount of your worldwide debt, as defined in subsection 995-1(1), used to calculate the result of step 1 in subsection 820-110(2)
• at label E, the amount of your worldwide equity, as defined in subsection 995-1(1), used to calculate the result of step 1 in subsection 820-110(2)
• at label F, your worldwide gearing debt amount worked out under subsection 820-110(2).

If you printed code 2 at question 32 – label A (outward investing financial entity (non-ADI) that is also an inward investing financial entity (non-ADI)), write:

• at label D, the amount of your statement worldwide debt, as defined in subsection 995-1(1), used to calculate the result of step 1 in subsection 820-111(2)
• at label E, the amount of your statement worldwide equity, as defined in subsection 995-1(1), used to calculate the result of step 1 in subsection 820-111(2)
• at label F, your worldwide gearing debt amount worked out under subsection 820-111(2)
• at label G, the amount of your statement worldwide assets, as defined in subsection 995-1(1), for the purpose of applying subsection 820-90(3)
• at label H, the amount of your average Australian assets, as defined in subsection 995-1(1), for the purpose of applying subsection 820-90(3).

If you printed code 3 at question 32 – label A (inward investing financial entity (non-ADI)) write:

• at label D, the amount of your statement worldwide debt, as defined in subsection 995-1(1), used to calculate the result of step 1 in section 820-217 or 820-219 as relevant
• at label E, the amount of your statement worldwide equity, as defined in subsection 995-1(1), used to calculate the result of step 1 in section 820-217 or 820-219 as relevant
• at label F, your worldwide gearing debt amount worked out under section 820-217 or 820-219 as relevant
• at label G, the amount of your statement worldwide assets, as defined in subsection 995-1(1), for the purpose of applying subsection 820-90(3)
• at label H, the amount of your average Australian assets, as defined in subsection 995-1(1), for the purpose of applying subsection 820-90(3).

If you printed code 4 at question 32 – label A and is (outward investing entity (ADI)) write:

• at label B, the worldwide group capital ratio worked out in accordance with subsection 820-320(3). For example, if the amount worked out under step 1 of the method statement in subsection 820-320(3) is 5.42% of the amount worked out under step 2, the decimal number you write at label B is 0.05420.
• at label C, your worldwide capital amount worked out under subsection 820-320(2).

Question 39a Restructuring in anticipation of debt deduction creation rules

Question 39a asks:

Did you restructure or replace an arrangement during the income year which would have satisfied the conditions in subsection 820-423A(2) or (5), if the arrangement was still in place on or after 1 July 2024?

Question 39a requires you to provide information if you restructured or replaced an arrangement during the income year which would have satisfied the conditions in subsections 820-423A(2) or 820-423A (5) of the ITAA 1997 if the arrangement had not been restructured or replaced and had still been in place after 1 July 2024.

The purpose of this question is to identify risks associated with restructuring in anticipation of the debt deduction creation rules in Subdivision 820-EAA of the ITAA 1997 applying from income years starting on or after 1 July 2024.

This question only requires you to disclose where a restructure or replacement of an arrangement was undertaken or started to occur during the 2023–24 income year. It doesn't require you to disclose arrangements where future debt deductions for the arrangement may be disallowed under Subdivision 820-EAA of the ITAA if the arrangement has not been restructured or replaced (or started to be restructured or replaced) during the 2023–24 income year.

If you didn't restructure or replace (or start to restructure or replace) an arrangement during the 2023–24 income year which would have satisfied the conditions in subsections 820-423A(2) or 820-423A(5) of the ITAA 1997 if the arrangement was still in place during the income year starting on or after 1 July 2024, print X in the No box at question 39a – label A then go to question 40.

If you did restructure or replace (or start to restructure or replace) an arrangement during the 2023–24 income year which would have satisfied the conditions in subsections 820-423A(2) or 820-423A(5) of the ITAA 1997 if the arrangement was still in place during the income year starting on or after 1 July 2024, print X in the Yes box at question 39a – label A and complete the field required below.

At question 39a – label B, write a description of the prior arrangements (for example, the arrangements that were restructured or replaced), the restructure or replacement of the prior arrangements and their tax effect including the following details:

• If the prior arrangements would have satisfied the conditions in subsection 820-423A(2), a description of the prior arrangements including
  • The following information for the debt or other financial arrangement giving rise to the debt deductions within the meaning of paragraph 820-423A(2)(c)
    • the nature of the debt or other financial arrangement
    • the parties to the debt or other financial arrangement
    • date of issue or entry into the debt or other financial arrangement.
  • Details of all CGT assets or the legal or equitable obligations that were acquired within the meaning of paragraph 820-423A(2)(a) and the date(s) on which they were acquired.
  • Names and details (including tax residency) of the acquirer and associate disposers, including any relevant associate pairs of the acquirer or associate disposer, within the meaning of subsection 820-423A(2).
  • Whether you were the acquirer or another relevant entity within the meaning of paragraph 820-423A(2)(c).
  • The total estimated debt deductions for the income year starting on or after 1 July 2024 that would have been disallowed under Subdivision 820-EAA of the ITAA 1997 if the prior arrangements had still been in place.
• If the prior arrangements would have satisfied the conditions in subsection 820-423A(5), a description of the prior arrangements including
  • The following information for the financial arrangement within the meaning of subsection 820-423A(5)
    • the nature of the financial arrangement
    • the parties to the financial arrangement
    • date of entry into the financial arrangement.
  • How the payer used the financial arrangement to fund or facilitate the funding or one or more payments or distributions within the meaning of paragraph 820-423A(5)(b).
  • Details of the payments or distributions made to an associate pair of the payer covered by paragraph 820-423A(5)(b) including
    • the date(s) on which the payments or distributions were made
    • the nature of the payments and distributions
    • the names and details (including tax residency) of the entities to which the payments were made.
  • Whether you were the payer or another relevant entity within the meaning of paragraph 820-423A(5)(c).
  • The total estimated debt deductions for the income year starting on or after 1 July 2024 that would have been disallowed under Subdivision 820-EAA of the ITAA 1997 if the prior arrangements had still been in place.
• A high-level description of each of the steps in connection with the restructuring or replacement of the prior arrangements including
  • The steps involved in terminating or otherwise ending, assigning or modifying the prior related party debt or financing arrangements used to fund the acquisition or holding of a CGT asset or a legal or equitable obligation within the meaning of subsection 820-423A(2).
  • The steps involved in terminating or otherwise ending, assigning or modifying the prior financial arrangements used to fund or facilitate the funding of the relevant payment or distribution within the meaning of subsection 820-423A(5).
  • The steps involved in entering into any new arrangement replacing, or in connection with restructuring, the prior arrangement.
  • The tax consequences of the restructure or replacement arrangements including whether Subdivision 820-EAA applies to the restructure or replacement arrangement.
• Whether you received any tax advice, and who provided the tax advice, in relation to applying provisions in in Subdivision 820-EAA of the ITAA 1997 to
  • Your prior arrangements
  • The restructure or replacement of your prior arrangements.

Continue to: Section E: Financial services entities

Return to: Instructions to complete the international dealings schedule