Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-E - Thin capitalisation rules for inward investing entities (ADI)  

Operative provisions

SECTION 820-405   820-405   Safe harbour capital amount  


The entity ' s safe harbour capital amount for the income year is the result of applying the method statement in this section. Method statement

Step 1.

Work out the average value, for the income year, of that part of the *risk-weighted assets of the entity that:

  • (a) is attributable to the *Australian permanent establishments at or through which it carries on its banking business in Australia; but
  • (b) is not attributable to the *OB activities of the Australian permanent establishments.

  • Step 2.

    Multiply the result of step 1 by 6%. The result of this step is the safe harbour capital amount .

    Example:

    The Global Bank is a foreign bank that carries on its banking business in Australia through a permanent establishment. The average value of its relevant risk-weighted assets is $140 million. Multiplying that amount by 6% results in $8.4 million, which is the safe harbour capital amount.


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