Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-D - Thin capitalisation rules for outward investing entities (ADI)  

Operative provisions

SECTION 820-325  

820-325   Amount of debt deduction disallowed  

The amount of * debt deduction disallowed under subsection 820-300(1) is worked out using the following formula:

Debt deduction     ×

Capital shortfall   Average debt

where:

average debt
means the average value, for the income year, of all the * debt capital of the entity that gives rise to * debt deductions of the entity for that or any other income year (other than any debt capital that is attributable to any of the entity ' s * overseas permanent establishments).

capital shortfall
means the amount by which the * adjusted average equity capital of the entity for that year (see subsection 820-300(3) ) is less than the entity ' s * minimum capital amount for that year.

debt deduction
means each * debt deduction covered by subsection 820-300(1) .

Note:

The disallowed amount also does not form part of the cost base of a CGT asset. See section 110-54 .