Item 2e identifies the gross amounts of loans and advances between international related parties for which an interest component is being charged.
The loans and advances to be shown here include all amounts borrowed between a taxpayer and the related parties.
The terms loans and advances are intended to be applied broadly in accordance with commercial and accounting practices (a rigorous application of the debt-equity test is not necessary).
Where you have borrowed amounts or received advances from an international related party or parties, add all the opening balances of these loans or advances and write the sum at G. Add all the closing balances for these loans and enter this amount at H.
Where you have loaned or advanced amounts to international related parties, add the opening balances of these loans and enter that total at I. Add the closing balances of the loans or advances and enter the total at J.
Example 4
An Australian company has several affiliates, which are related parties, in foreign countries. At the start of the income year, the company's balance sheet showed $182,678 owing to the affiliates by the company and $53,250 owing by the affiliates to the company.
At the end of the income year, $86,782 was owed to the affiliates by the company, and $245,354 was owed by the affiliates to the company. Item 2e would be completed as follows:
Opening Balance |
Closing Balance |
G |
182,678 |
H |
86,782 |
I |
53,250 |
J |
245,354 |