Income Tax Assessment Act 1997
View history note
Hide history noteSECTION 820-219 820-219 Worldwide gearing debt amount - inward investor (financial)
If the entity is an * inward investor (financial) for the income year, the worldwide gearing debt amount is the result of applying the method statement in this section. Method statement
Step 1.
Divide the entity ' s * statement worldwide debt for the income year by the entity ' s * statement worldwide equity for that year.
Step 2.
Add 1 to the result of step 1.
Step 3.
Divide the result of step 1 by the result of step 2.
Step 4.
Multiply the result of step 3 in this method statement by the result of step 5 in the method statement in subsection 820-210(2) .
Step 5.
Add to the result of step 4 the average value, for that year, of the entity ' s * zero-capital amount that has arisen because of the Australian investments mentioned in step 1 of the method statement in subsection 820-210(2) .
Step 6.
Add to the result of step 5 the average value, for that year, of the entity ' s * associate entity excess amount. The result of this step is the worldwide gearing debt amount .
Example:
MSR Limited, a company that is not an Australian entity, has investments in Australia. MSR Limited has statement worldwide debt of $ 90 million and statement worldwide equity of $ 30 million. The result of applying step 1 is therefore 3. Dividing 3 by 4 (through applying steps 2 and 3) and multiplying the result by $ 100 million (which is the result of step 5 of the method statement in subsection 820-210(2) ) equals $ 75 million. The zero-capital amount is $ 5 million. Adding that amount to $ 75 million results in $ 80 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $ 80 million.
This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.